Despite Housing Shortage, America Has 5.6 Million Vacant Homes—What Gives?
The recent study by LendingTree has unveiled a surprising statistic: there are 5.6 million vacant homes in the United States, despite the ongoing narrative of a housing shortage. This figure represents 7.37% of homes in the 50 largest metropolitan areas. However, this does not necessarily indicate an overabundance of housing. According to Jacob Channel, a senior economist at LendingTree, the presence of vacant homes does not equate to an excess supply, especially given the high home prices.
Vacant homes are not necessarily abandoned or dilapidated. The primary reason for vacancy is that these homes are available for rent. Hannah Jones, a senior economic research analyst at Realtor.com, notes that rental vacancies have increased as rental inventories have recovered in many markets. This means more rental properties are sitting empty, awaiting tenants. Another significant reason for vacancy is that properties are used for seasonal, recreational, or occasional purposes, such as vacation homes or timeshares. Additionally, some homes remain vacant for personal or family reasons, where owners may not wish to rent or sell them.
Despite the number of vacant properties, the housing supply remains insufficient to meet the demand from homebuyers and renters. Homeowner vacancy rates are at 0.9%, and rental vacancy rates are at 6.6%, both near historic lows. This shortage continues to keep housing prices elevated, as the for-sale inventory is more than 20% below pre-pandemic levels.
In terms of vacancy rates, New Orleans and Miami top the list with rates of 14.50% and 12.92%, respectively. These cities, known for their popularity as vacation destinations, experience seasonal demand fluctuations that contribute to higher vacancy rates. Conversely, cities like Portland, Minneapolis, and Washington, D.C., have some of the lowest vacancy rates, all below 5.0%, primarily due to rental vacancies.
The study highlights the complexity of the housing market, where vacancies do not necessarily translate to available housing for purchase or long-term rental. Factors such as location, mortgage rates, and the specific reasons for vacancy play significant roles in determining housing prices and availability. Despite the presence of vacant homes, the market remains undersupplied, maintaining high home prices.
