In wake of the Fed’s recent rate cut last month, hesitant Americans are becoming open to the idea of entering the market to begin their homebuying journey. However, people actually need homes to do so. There is a concerning housing shortage in the U.S., and while one of the primary drivers of today’s high housing costs—although it’s not always the case—is an overall lack of housing supply.
In spite of this, a large number of American homes remain unoccupied, or at least momentarily, according to a new LendingTree study. Among the 50 major metro areas in the country, there are slightly more than roughly 5.6 million empty housing units.
Now, this doesn’t imply that metro streets are lined with millions of abandoned and run-down houses. Aside from being uninhabitable, vacant houses might be uninhabited for a variety of reasons, and they typically are. A house may be deemed vacant even when it is just unoccupied for a brief period of time, such as when it is for sale or rental and is a vacation home that isn’t being utilized.
To rank the 50 largest metro areas in the US by percentage of vacant homes, LendingTree examined the most recent data from the American Community Survey conducted by the U.S. Census Bureau. They also examined the causes, as knowledge of an area’s vacancy rate might be crucial to comprehending the general state and nature of its housing market. In every metro area included in the study, tens of thousands of housing units are unoccupied, despite large variations in vacancy rates.
Tens of Thousands of Housing Units Remain Vacant
The 50 largest metro areas in the country have somewhat more than 5.6 million unoccupied housing units. Across these 50 metro areas, the vacancy rate increased somewhat from 7.22% in 2022 to 7.37% in 2023. Miami, New Orleans, and Tampa, FL, have the greatest rates of vacancy. In these metro areas, the vacancy rate is 14.50%. 11.81% and 12.92%, in that order. In 2023, there were just under 600,000 unoccupied housing units in these three metro areas. In contrast to 2022, vacancy rates decreased in Tampa from 12.15% but increased in New Orleans and Miami from 13.88% and 12.65%.
Top 10 Metros with the Highest Vacancy Rates
- New Orleans
- Miami
- Tampa, FL
- Birmingham, AL
- Memphis, TN
- Pittsburgh
- Riverside, CA
- Cleveland
- San Antonio
- Phoenix
Portland, Oregon (4.54%), Minneapolis (4.66%), and Washington, D.C. (4.85%) have the lowest rates of vacancy. Only two other cities in the analysis had vacancy rates less than 5.00%: Salt Lake City (4.88%) and Austin, Texas (4.96%). In the 50 major metros in the country, over half of all unoccupied apartments remain vacant either because they are not yet rented out or are only occupied sometimes. Some 20.73% of the unoccupied dwelling units in this study are only partially inhabited for seasonal, recreational, or infrequent purposes, whereas 27.90% of the vacant housing units are unoccupied because they are for rent.
Top 10 Metros with the Lowest Vacancy Rates
- Portland, OR
- Minneapolis
- Washington
- Salt Lake City
- Austin, Texas
- Denver
- Cincinnati
- San Jose, CA
- Boston
- Los Angeles
NOLA Tops List of Home Vacancies
1. New Orleans
- Total housing units: 466,902
- Vacant housing units: 67,704
- Vacancy rate: 14.50%
- Most common reason for vacancy: Housing unit is for rent
- Share of vacant housing units empty for most common vacancy reason: 23.49%
- Median home value: $263,500
- Median gross rent: $1,159
2. Miami
- Total housing units: 2,698,630
- Vacant housing units: 348,710
- Vacancy rate: 12.92%
- Most common reason for vacancy: Housing unit is for seasonal, recreational or occasional use
- Share of vacant housing units empty for most common vacancy reason: 50.44%
- Median home value: $474,000
- Median gross rent: $1,914
3. Tampa, FL
- Total housing units: 1,540,717
- Vacant housing units: 181,929
- Vacancy rate: 11.81%
- Most common reason for vacancy: Housing unit is for seasonal, recreational or occasional use
- Share of vacant housing units empty for most common vacancy reason: 45.18%
- Median home value: $372,100
- Median gross rent: $1,729
The “City of Roses” Leads in Least Vacancies
1. Portland, OR
- Total housing units: 1,077,557
- Vacant housing units: 48,906
- Vacancy rate: 4.54%
- Most common reason for vacancy: Housing unit is for rent
- Share of vacant housing units empty for most common vacancy reason: 42.38%
- Median home value: $560,900
- Median gross rent: $1,670
2. Minneapolis
- Total housing units: 1,574,923
- Vacant housing units: 73,470
- Vacancy rate: 4.66%
- Most common reason for vacancy: Housing unit is for rent
- Share of vacant housing units empty for most common vacancy reason: 33.91%
- Median home value: $369,500
- Median gross rent: $1,427
3. Washington, D.C.
- Total housing units: 2,532,369
- Vacant housing units: 122,794
- Vacancy rate: 4.85%
- Most common reason for vacancy: Housing unit is for rent
- Share of vacant housing units empty for most common vacancy reason: 32.79%
- Median home value: $574,000
- Median gross rent: $1,945
How are property prices still so high when there are so many empty homes?
If the housing market were simplified, there would probably be a significant inverse link between rent and home prices and vacancy rates. A lack of demand from renters or buyers should be indicated by high vacancy rates, which would increase the number of available properties and drive down prices. Conversely, low vacancy rates would indicate great demand, limited supply, and higher pricing. It may seem odd to some that so many properties in the biggest metro areas in the country remain unoccupied given the current high level of home prices.
Even though the total vacancy rate in a certain area isn’t complex enough to completely explain why properties in that area are so expensive, it can nevertheless provide insight into how the local housing market is doing. For instance, sellers may be parting with their properties for less money than they may have obtained if both the vacancy rate and prices are quite low. Low vacancy rates and high home prices may indicate that there is fierce competition in the market and that it may be difficult for customers with lower incomes to find housing.
On the other hand, high home prices and vacancy rates may indicate that a neighborhood has special qualities, such as being a popular destination for tourists or being sought after by investors who don’t live there year-round. In the meanwhile, low property values and high vacancy rates may indicate socioeconomic difficulties in a given location.
To read the full report, including more homebuying tips, data, charts, and methodology, click here.
The post Catch-22: When You Have Millions of Vacant Homes But Also a Housing Shortage first appeared on The MortgagePoint.
