The latest Census data show that the vacancy rate remains elevated, and an unusually high share of vacant homes are being held off the market. This vacancy overhang is holding back construction activity.
The 2013 Q3 Census Homeownership and Vacancy survey shows that the vacancy rate is still above its pre-bubble level and remains unchanged from one year earlier. This might come as a surprise to house hunters, who have struggled with limited inventory when trying to find a home to buy or rent, but an unusually high share of vacant homes today is being held off the market. The elevated vacancy rate discourages new construction activity and is therefore one of the major hurdles to a full housing recovery.
To understand why vacancies are still widespread and what impact they have, we dug deeper into the Census data as well as other data sources that report vacancies at the metro level. Here’s what we found.
Nationally, Vacancy Rate Still Above Pre-Bubble Level
In the third quarter of 2013, 10.2% of housing units were vacant, excluding vacant homes that the Census classifies as “seasonal,” such as beach homes. Vacant homes include those for sale or for rent, as well as homes “held off market” for various reasons. This vacancy rate of 10.2% – the share of homes that are empty – was unchanged from 2012 Q3 and well above the pre-bubble level. In fact, the vacancy rate today (10.2%) is closer to its peak during the recession (11.0% in Q3 2010) than before the bubble (8.8% in Q3 2000).
But wait – aren’t homes hard to find? Buyers (and renters, too) have had little to choose from because the listed inventory is low. The share of the overall housing stock that is listed for sale, based on National Association of Realtors (NAR) and Census data, rose slightly in 2013 Q3 compared to last year but is lower than at any other point during or after the bubble. In other words, the for-sale inventory is back down to its 2000 level, and tight inventory has helped fuel sharp price increases across the country over the past two years. That means there’s an inventory shortage, but not a housing shortage:
How can the for-sale inventory be relatively low while the vacancy rate is high? Because the share of vacant homes being held off the market – that is, neither for sale nor for rent – is rising. In 2013 Q3, 53.5% of vacant homes were held off market, up slightly from 52.9% in 2012 Q3 and from a low of 45% at the height of the housing bubble in 2006.0 comments
How unusual is Barbie, demographically speaking? She’s pretty special today – but almost unheard-of when she first became a homeowner in 1962.
Barbie is a young, single woman who lives in a house she owns. Let’s momentarily ignore the fact that her home is listed for $25 million exclusively on Trulia, and acknowledge that owning a house in the first place — “Dreamhouse” mansion or not — is very unusual for young women today. And it was even rarer when she originally became a homeowner in 1962. Looking back over the decades at how unusual Barbie is, demographically speaking, shows how broad social changes and the recent housing boom and bust have affected the living situations of young women.
Using U.S. Census data from 1960 to 2011 (the latest available; see note at end of post), we calculated the share of young women, aged 25 to 34, who are “living like Barbie” in that they:
In 2011, 1.6% of young women shared Barbie’s living situation in all these ways. Here’s how we arrived at that. In the 25-34 year old age group, 31% of women were single and had no kids. Among these single women with no kids, approximately one-third were the “head of household.” The rest were living in someone else’s home (such as their parents). That means 11% of young women were single with no kids and the “head of household.” Of that 11%, approximately one quarter owned their home, and the rest rented. Among the homeowners in this group, a little more than half owned a single-family, detached house, as opposed to owning a townhouse or condo. That’s how we calculated that 1.6% of young women in 2011 had a living situation similar to Barbie.
That may sound low, but the world has come a long way. Rare as it is today for young women to own a home, it was almost unheard of in 1960, one year after Barbie was introduced and two years before she became a homeowner. Back then, just 0.1% of young women owned a home – around one in a thousand. That means Barbie’s living situation was 15 times more common in 2011 than in 1960 – as the chart below shows.0 comments