A report from Lending Tree reveals the diverse reasons behind housing vacancies in the nation’s largest metropolitan areas, challenging the assumption that high vacancy rates always correspond with greater affordability.
A recent report by Lending Tree has shed light on the state of vacant housing units in the 50 largest metropolitan areas in the United States. With a total of 5.47 million vacant units and an average vacancy rate of 7.22 percent, the report highlights the complexities surrounding housing vacancies and their impact on affordability. Contrary to popular belief, the report shows that high vacancy rates do not necessarily equate to lower home prices, as various factors contribute to the availability and cost of housing in different cities.
Varied Reasons for Vacancies
The Lending Tree report reveals that the reasons for housing vacancies vary widely between cities. Factors contributing to the high vacancy rates include vacation rentals and Airbnbs, disinvestment and deteriorating conditions, and a mismatch between local wages and housing costs. Surprisingly, only about a quarter of vacant housing units are actively available for rent, while a mere 8 percent are undergoing renovation. The majority of vacant units remain unused for at least part of the year.
Affordability and Vacancy Rates
Contrary to the assumption that high vacancy rates indicate greater affordability, the report shows that there is no clean relationship between vacancy rates and affordability in the largest metropolitan areas. Jacob Channel, the author of the report, emphasizes that multiple factors come into play when determining housing prices in a given area. The reasons behind vacant homes significantly impact the cost of housing, making it more complex to draw a direct correlation between vacancy rates and affordability.
Availability for Rent and Affordability
While it might be expected that actively available rental vacancies would contribute to lower housing costs, this is not always the case. For instance, New Orleans has the highest percentage of “for rent” vacancies at 16.6 percent, but the city is not considered affordable. The lack of affordability and high vacancies in New Orleans can be attributed to low wages and disinvestment in existing housing. Birmingham, Alabama, also experiences high vacancy rates at 10.72 percent, despite facing affordability issues due to factors such as low wages and residential segregation.
Vacation Rentals and Airbnbs
Cities like Miami and Tampa, Florida, have high vacancy rates due to vacation rentals and Airbnbs. In Miami, where the vacancy rate is 12.6 percent, 53.3 percent of vacancies are attributed to homes being used for seasonal, recreational, or occasional purposes. Similarly, Tampa has a vacancy rate of 12.15 percent, with 43.8 percent of vacant units being vacation rentals or Airbnbs. These figures highlight the impact of short-term rentals on housing availability and affordability in popular tourist destinations.
Pricing and Market Dynamics
In some cases, housing units remain vacant due to high prices. Developers, facing increased costs during the pandemic, pass those expenses onto renters. If potential tenants are unwilling to meet these high prices, landlords may choose to wait for better market conditions rather than lower the rent. However, this issue varies depending on the region. For example, in San Jose, despite extremely high home prices, properties typically remain on the market for only a few weeks.
The Lending Tree report on vacant housing units in major US metropolitan areas challenges the simplistic narrative that high vacancy rates always correspond with greater affordability. The findings highlight the multifaceted nature of housing markets, where various factors contribute to vacancy rates and housing costs. Understanding the reasons behind vacancies is crucial in addressing affordability issues and ensuring adequate housing for all. As the housing crisis continues to evolve, policymakers and stakeholders must consider these complexities to develop effective solutions that meet the diverse needs of communities across the nation.