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.
That brought the national homeowner vacancy rate to 2.7%, up from 2.0% a year earlier. 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%.
Let's ponder those figures for a minute.
The figure is at it's higher point .... EVER. That's not a good sign in any market.
The figure jumped .7% in a year. And the number had never been above 2% ....EVER.
So, the total number of vacant homes available for sale
1.) Has never been this high
2.) Has never even approached this level since the Census started tracking this figure
3.) Got to this level really quickly.
Housing bottom? Not with numbers like this.
4 comments:
I've heard/read several admonitions to keep an eye on the subprime market, e.g. http://www.autodogmatic.com/index.php/sst/2007/02/02/p438#more438
There's so much jargon thrown around I really don't feel comfortable analyzing this kind of information nor am I able to judget the accuracy of a website. What does it REALLY mean if the "subprime market collapses"?
And how could there have been any kind of uptick in housing if the "subprime market has almost shut down?'
Herb Greenberg of marketwatch has a piece of up on a subprime lender:
http://blogs.marketwatch.com/greenberg/
A lot of those homes will wind up back on the market.
What the housing market has seen the past few months is a typical seasonal decrease in inventory, inventory will spike again in the spring.
The subprime market played a big role a fueling the acceleration in the housing market.
Millions of homeowners became so by opting for the profitable loans. Most of these buyers could have qualified for less expensive, less risky loans, but were lured in by the siren song of low monthly payments.
When the interest rates on these loans reset and the new payments are considerably higher, these homeowners often can't afford the payments and lose the house to foreclosure or have to sell at a considerable discount.
I believe it will take another year to flush all of these unfortunate loans out of the system.
And then another ten years for the housing market to recapture the gains it made in the early 00s.
Look how long the stock market took after the dot com bust. It's 2007 and the new high was just broken. That's seven years! On a much more volatile and liquid market than housing.
Another year sounds about right to me too. I suppose there are regional variations, and variations on the types of housing. My own gut says that condos are the most overbuilt, but there is an oversupply of all types of housing - just a matter of degree, I guess.
There are a number of large condo high-rises that are still under construction here in the DC area. Some of them are close to Metro, so they may still make some amount of long-term sense.
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