Many Homes For Sale Sit Vacant
Recently, we have seen a lot of good news and positive outlooks concerning the status of our housing market.
Most analysts and industry insiders are agreeing that the worst of the slowdown is behind us and we should see home prices begin to level out and sales start to pick up.
But as soon as we receive all of this good news, of course some bad news starts to trickle in.
One piece of such news concerns the level of un-occupied homes that are available for-sale on the market, which is at a very high level.
A February 6, 2007 article by Michael Corkery of The Wall Street Journal, “Vacant homes for sale cloud U.S.’s economic outlook,” discusses this bit of negative news that has just come about concerning our housing market.
“Amid brightening hopes that the U.S. housing market is stabilizing, some economists are zeroing in on a piece of data that could augur badly for the consensus view: the homeowner vacancy rate.”
“That figure, an often-overlooked measure of how many homes for sale in the country are empty, has climbed to its highest level since the Census Bureau began tracking it four decades ago. Last week, the bureau said that in the final three months of 2006 there were about 2.1 million vacant homes for sale.”
This has made the homeowner vacancy rate go up from being 2.0 percent last year, to being 2.7 percent.
It also looks that like the regular housing market, the homeowner vacancy rates also varies by region.
“Before 2006, the number had never risen above 2.0%. Like the housing economy more broadly, the measure varies by region: The South had a homeowner vacancy rate of 3.0%, the Midwest had a rate of 2.9%, the West had a 2.4% rate and the Northeast had a rate of 2.0%.”
Although this report usually garners very little attention, this year, the larger than usual amount of homes for sale has caused some concern about the overall inventory of homes for sale, which is already large, as well as its affect on prices.
“Goldman Sachs economist Jan Hatzius concluded in a report last Monday that rising vacancies signal that excess housing supply continues to grow -- and that new construction has to decline further this year, even after a 13% decline in new home starts in 2006.”
“Meantime, J.P. Morgan economist Haseeb Ahmed said the overhang of vacant housing stock could erode existing home values as sellers slash prices to move their vacant properties. Economists fear that many vacant homes are owned by speculators who are stuck with investment properties that they can't sell and may be under increasing pressure to drop their prices. ‘We are concerned that there could be downward pressure on prices for awhile,’ Mr. Ahmed says.”
These concerns seem to be clouding the possibility for a fast recovery that many people were counting on just a few weeks ago. But hopefully, the amount of vacant homes will have little affect on the overall market and its recovery.