Housing Market Remains Tight in Most Metro Areas
Listed housing vacancies remain low across the vast majority of metro areas, new Census estimates show. View areas with the least vacancies and historical data for each market.
Across the vast majority of the nation’s major metro areas, listed housing vacancies continue to remain few and far between.
The Census Bureau pegged the national vacancy rate for rentals at 8.3 percent last quarter, hovering around the lowest levels since early 2001. For homeowner housing, the vacancy rate held steady at 1.9 percent -- also a figure that hasn’t climbed since the recession hit.
It’s within metro areas – both principal cities and suburbs – that the market remains tightest. Industry observers report all of the largest markets are just about full, with the exception of Las Vegas, Atlanta and a few others.
Construction of new housing dried up in 2009 and 2010, and the normal loss of some units meant essentially no net increase in housing units. Demand has since made a comeback, but new construction is ramping up only slowly, said Mark Obrinsky, the National Multi Housing Council’s chief economist.
Renters are also not leaving apartments for multi-family homes as frequently as in years past, further pushing down vacancy rates.
“Vacancy rates certainly won’t go higher, and it’s possible they’ll go a little lower,” Obrinsky said.
Real estate website Trulia published its own report Wednesday identifying metro areas with the highest and lowest vacancy rates. According to their set of data, housing inventories were lowest in the following markets last month:
|Area||Vacancy Rate: October 2013|
|San Jose, CA||3.0%|
|Ventura County, CA||3.4%|
|Orange County, CA||3.9%|
|Minneapolis-St. Paul, MN-WI||4.1%|
|San Francisco, CA||4.5%|
|Middlesex County, MA||4.5%|
|Long Island, NY||4.7%|
California metros stand out, led by San Jose’s vacancy rate of just 3 percent. The report makes the point that it’s more difficult to build new housing in the state, stemming from both building restrictions and the limited availability of land.
Trulia’s estimates are different from the quarterly rates published by the Census Homeownership and Vacancy Survey, taking into account data from the American Community Survey, decennial Census and U.S. Postal Service address files.
The Census Bureau's Homeownership and Vacancy Survey measures vacancies for 75 metro areas. In 2012, rental vacancy rates ranged from only 2.3 percent in the Oxnard-Ventura, Calif., area to 17.5 percent in Richmond, Va., and 18.5 percent in Orlando, Fla.
|Metro Area||2012 Annual Rental Vacancy Rate|
|Oxnard-Thousand Oaks-Ventura, CA||2.3%|
|San Diego-Carlsbad-San Marcos, CA||3.2%|
|San Francisco-Oakland-Fremont, CA||3.8%|
|Los Angeles-Long Beach-Santa Ana, CA||4.9%|
(The Census Bureau's most recent quarterly estimates have extremely high margins of error at the metro area-level, so 2012 annual figures are shown here.)
On the opposite end of the spectrum, the few metro areas with notably higher vacancy rates generally fit into one of two categories. Some were booming up until the bursting of the housing bubble, then population and job growth dropped off. New construction didn’t immediately halt, leaving these markets with an excess supply of housing. Such markets include Orlando, Las Vegas and Phoenix, Obrinsky said.
Other metros face more serious long-term challenges, such as a steadily declining population or severe job losses. It’s no surprise that Detroit, which lost by far the largest number of residents of any city between 2010 and 2012, is also home to the highest vacancy rate -- 19 percent, according to Trulia’s estimates
Across all metros, demographic trends played a role in holding down vacancy rates, and this is particularly true of rental vacancies. As a whole, young people are delaying marriage and starting families, often meaning they’re putting off buying homes. The number of single parent-households also climbed, furthering demand for rentals.
Consequently, the homeownership rate has slowly fallen in recent years, declining from around 68 percent in the early 2000s to 65.3 percent last quarter.
So all things considered, the listed housing inventory remains fairly tight.
Examining vacancies more broadly, though, paints a much different picture of the housing market.
Jed Kolko, Trulia’s chief economist, says an inventory shortage, not a housing shortage exists. Kolko’s report notes that the overall share of empty homes (10.2 percent excluding seasonals) still has yet to fall significantly from its peak reached during the recession.
That’s largely because an estimated 54 percent of vacant homes were held off the market last quarter, a figure that continues to climb after dropping to the mid 40s during the housing bubble. In fact, Trulia reports 86 of the 100 largest metro areas have higher overall vacancy rates today than prior to the housing bubble.
Kolko argues that for both construction and the housing market to return to normality, these vacant homes will need to be filled up.
Make a selection below to view annual housing vacancy totals for 75 metro areas with published Census data.
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