From the Wall Street Journal:
Vacant Homes For Sale Cloud Economic Hopes
Amid brightening hopes that the U.S. housing market is stabilizing, some economists are zeroing in on a piece of data that could augur badly for the consensus view: the homeowner vacancy rate.
That figure, an often-overlooked measure of how many homes for sale in the country are empty, has climbed to its highest level since the Census Bureau began tracking it four decades ago. Last week, the bureau said that in the final three months of 2006 there were about 2.1 million vacant homes for sale.
That brought the national homeowner vacancy rate to 2.7%, up from 2.0% a year earlier. Before 2006, the number had never risen above 2.0%. Like the housing economy more broadly, the measure varies by region: The South had a homeowner vacancy rate of 3.0%, the Midwest had a rate of 2.9%, the West had a 2.4% rate and the Northeast had a rate of 2.0%.
The report, which usually gets little attention, sparked fresh concerns about the housing market. Goldman Sachs economist Jan Hatzius concluded in a report last Monday that rising vacancies signal that excess housing supply continues to grow — and that new construction has to decline further this year, even after a 13% decline in new home starts in 2006.
Meantime, J.P. Morgan economist Haseeb Ahmed said the overhang of vacant housing stock could erode existing home values as sellers slash prices to move their vacant properties. Economists fear that many vacant homes are owned by speculators who are stuck with investment properties that they can’t sell and may be under increasing pressure to drop their prices. “We are concerned that there could be downward pressure on prices for awhile,” Mr. Ahmed says.
Such worries could cloud hopes for a swift housing rebound. Those hopes have been bolstered recently by signs that the market may be stabilizing. Sales, which fell sharply through much of last year, have leveled off in many metropolitan areas and mortgage applications have been rising.
Saw this in “small blurb” form on the front page of the WSJ this morning. Makes me wonder how some people can afford to have a house just sitting vacant like that where a DINK couple like me and my wife are several years off from being able to afford a starter home :(
My response to that is let them sweat out the monthly bills. Sellers are disconnected from home values. Let them sweat it out.
I’ll add into my comment above that sellers who are getting only lowball bids have to realize that the value of their home is only what someone would be willing to pay for it now, not what someone paid for their neighbors house last year or the year before. Ask a trader liquidating a position or a company going bankrupt what they can get for their assets. It’s only what buyers with money will pay for it. They can either take the offer now or wait it out. The desperate sellers will be the first to take the lowball offers.
I looked at raw Census data for the Northeast. The 2% vacancy rate for the Northeast for the 4th qtr 2006 is the largest in their database, which runs back to 1956. The average for the Northeast from 1956 – 1006 was 1.1%.
Unfortunatly, they don’t have state specific rates.
“The 2% vacancy rate for the Northeast for the 4th qtr 2006 is the largest in their database, which runs back to 1956. The average for the Northeast from 1956 – 1006 was 1.1%.”
great info, thanks