Housing vacancies hit record high
With home sales diving, empty houses with for sale signs out front are becoming part of the landscape.
NEW YORK (CNNMoney.com) -- In the latest sign of weakness in the housing market, there are now a record number of homes sitting vacant and for sale in the United States, and the percentage of Americans owning a home has slipped slightly.
A Census Bureau reported Friday that there are were a record 2.18 million homes for sale in the first quarter, which were not occupied, up 4 percent from the record levels seen in the fourth quarter, and up 38 percent from year earlier levels.
According to the report, 2.8 percent of all residential properties were vacant. That's up from 2.7 percent a quarter earlier and from 2.1 percent in the first quarter of 2006.
When properties sit empty, the owners are more motivated to make a sale and more likely to drop their prices, affecting housing prices for the entire market.
It was the eighth consecutive quarter of increasing home vacancies and the highest percentage of vacant properties since the Bureau began compiling statistics on them in 1956.
Home ownership has fallen slightly over the past year to 68.4 percent of all households, down from 68.9 percent in the previous period. The record high ownership rate of 69.2 percent was reached in the fourth quarter of 2004.
Mike Larson, real estate analyst for Weiss Research, an investment adviser in Jupiter, Florida, attributes much of the increase to the side effects of the bust in speculation, much of it in condo housing.
"It's clearly a reflection of the condo boom that had hit many markets - Miami, Phoenix, Las Vegas and all. There is a lot of excess inventory," he said.
Cities and suburbs recorded the highest rates of vacancies with 4 percent of homes in principal cities vacant (up from 2.5 percent a year ago) and 2.4 percent of homes in suburbs (up from 1.8 percent).
The areas outside metropolitan areas recorded a vacancy rate of 2.2 percent, unchanged from the first quarter of 2006.
Regionally, the South had the highest rate of vacancy, at 3.2 percent. The Northeast's rate was the lowest, at 1.9 percent.
Larson does not forecast any quick turnaround. He believes it will take a long time to absorb the excess inventory.
For one thing, he expects a burst of relistings starting this spring. "Many owners tried to sell last year and pulled their listings from the market. They'll be putting them back in," he says.
Then there is abandonment of many markets by speculators. Investors are not willing to retain ownership very long if they are losing money every month and speculative investing soared through the tailend of the housing boom.
"In 2005, 40 percent of all homes were bought as second homes, mostly as speculative investments," said Larson. "When the profit motive is gone, they're more likely than owner/occupiers to sell out."
And the upsurge in foreclosures and forced sales are also dumping inventory on the market. Foreclosures are up 47 percent year-over-year, according to online foreclosure marketer, RealtyTrac.
In a related story, rental vacancies have also climbed, to 10.1 percent during the first quarter, from 9.5 percent a year ago. Larson thinks that investors, again, contributed much to that increase.