These 15.6 million homes represent units that would be owner-occupied as well as rented, with vacancies among rentals more than six times as high.
By Manuel Gutierrez, Consulting Economist to NKBA
Talk about empty nests.
There are currently 141.8 million housing units in the U.S., including those in single-family and multifamily buildings, as well as units converted from commercial buildings, like warehouses. Among these, nearly nine of 10, or 126 million, are occupied by their owners or rented out. The remaining 15.6 million are vacant and are categorized into the five distinct groups shown in Figure 1.
The largest group of “vacant” homes, 45% of the total or 7 million homes, are described as “Held off market.” Two million of “held off” units are destined for “occasional use,” and another 1.2 million are classified as URE, which means the “user resides elsewhere.”
These are other properties owned, not for sale, but not necessarily vacation homes.
The vast majority of “held off market” units, 3.9 million in 2Q 2021, are units neither for rent nor for sale. There are several reasons why these units are “held off market.” The most common are personal or family reasons (30%), or the unit needs repair or is currently being repaired (31%). Owners preparing it for rental/sale, at 8%, is another designation for these units.
Just under 1% of all properties for sale are currently vacant, far less than during the great recession of 2008, when it was three times as high.
Seasonal units are the largest of the remaining four groups of vacant houses, representing 25% of the total, or more than 3.8 million units. These consist of second homes or time-shares.
The two green bars in Figure 1 represent houses that are on the market for sale or rent. Combined, they total 3.6 million housing units, or 24% of all vacancies.
Figure 2 shows “for rent” or “for sale” vacant units as a proportion of the corresponding total units that are either rented or owned housing units. These proportions are what is commonly called “rental” or “for sale” vacancy rates.
The vacancy rate for rental units is always several times larger than for owned homes. In the latest quarter, it’s more than six times higher. One reason is that a significant proportion of the units are rented to students, who constitute a less stable population group.
Currently, fewer than 1% of “for sale” properties are vacant. Figure 2 shows that the highest number of “for sale” vacancies was during the 2007-2009 economic recession, when it was close to 3%, a time when millions of homeowners could not keep up with monthly mortgage payments and lost
their properties to foreclosure. Several million homes came onto the market as a result of those foreclosures.
The 6.2% national vacancy rate for rental properties varies across geographic groups (Figure 3). Curiously, they are higher outside metropolitan areas, or MSAs (6.9%) than inside of them (6.1%).
In contrast, central cities have much higher vacancy rates than suburbs, 6.7% vs. 5.4%.
Regionally, the highest rental vacancy rates are in the Midwest, at 7.3%, and the South, at 6.9%.
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