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Home Publications Blogs Beat the Press Housing Vacancy Rates Fall and No One Notices

Housing Vacancy Rates Fall and No One Notices

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Friday, 02 November 2012 05:37

The Census Bureau reported this week that housing vacancy rates in the third quarter were substantially lower than their year ago level. The vacancy rates for rental units fell from 9.8 percent in the third quarter of 2011 to 8.6 percent this year. The vacancy rate for ownership units from 2.4 percent to 1.9 percent. (There are roughly twice as many ownership units as rental units.) The third data quarter data indicates that the housing market is substantially tighter than it was 2-3 years ago, even though vacancy rates are still well above pre-bubble levels.

It is remarkable that the vacancy data receive so little attention. These data were one of the ways that economists could have recognized the housing bubble. While house prices were going through the roof in the years 2002-2006, the vacancy rate was continually hitting new records. Concepts taught in advanced economics classes indicate that the price of items in excess supply are not supposed to be rising. It was therefore not reasonable to expect the run-up in house prices to be sustained given the large amounts of vacant housing available. The reduction in the excess supply is consistent with other data showing a recovering housing market. 

Comments (3)Add Comment
But the banks...........
written by EMichael, November 02, 2012 10:09
I am not sure about the housing vacancy rates as I believe that banks are holding back on putting foreclosed houses on the market.

Can't swing a dead cat in the Valley of the Sun without hitting a house that was foreclosed upon a couple of years ago and still has not hit the market.
REOs
written by David, November 02, 2012 11:19
@EMichael: see the definition of vacancy rate. There are a lot of unoccupied houses owned by banks, due to the banks' lack of diligence. I'm more concerned for the people who used to live in those houses, hence for the recovery of the economy. And the vacancy rates do indicate something about the state of the housing market.
recovery?
written by mel in oregon, November 02, 2012 3:11
i don't see a recovery with all the people that have lost employment, lost benefits, lost pensions & lost homes. there may be a lot of homes off the market by banks, & wealthy shysters scooping up homes for pennies on the dollar, but there isn't a real recovery, at least for many millions of americans no matter what the charts & graphs say.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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