Shadow inventory persists
Overbuilding and a foreclosure epidemic spurred by the housing and financial crises have saddled the United States with a staggering surplus of homes for sale, many of them distressed properties or vacant.
Vacancies are a key measure of the health of the housing market, says Jed Kolko, chief economist at real estate information website Trulia. Fewer vacancies can indicate a robust local economy with employment opportunities, while high vacancy rates can depress home prices and discourage new construction.
The disparity in vacancy rates across the country is huge. According to 2010 Census data, rates ranged from 3.9 percent in San Jose, Calif. to 13.9 percent in New Orleans, La. Areas plagued with high vacancy rates tend to be regions that have suffered some of the largest drops in home prices, Kolko says. They also tend to have high unemployment rates.
California is an odd case–although the epicenter of the housing bubble and subsequent meltdown, it enjoys some of the lowest vacancy rates and some of the priciest housing markets. Despite substantial price declines and foreclosure troubles, the supply and demand dynamic still works to the Golden State’s advantage. In short, there still aren’t enough homes to satisfy the demand to live there.
Looking ahead, where vacancy rates are lowest—the West Coast, Northeast and upper Midwest—housing markets will recover sooner and prices will start to creep up again, Kolko says. Conversely, areas with high vacancy rates will have to wait longer for the excess supply of homes for sale to dissipate and home prices to rebound.
Here's a look at regions with the highest and lowest vacancy rates.