I just read in the paper that 1 out of every 9 homes in the U.S. is vacant. I know the housing market is bad right now, but can this really be true?
A: If you're picturing a John Cougar Mellencamp America, with wind blowing through every ninth house, no. The headline that ran in USA Today recently certainly was frightening: "1 in 9 Homes Sit Empty." It was also, it seems to me, amazingly overblown.
The source given was the U.S. Census Bureau -- which rarely states anything that directly, preferring instead to let charts and tables speak for themselves. So let's go to the Census Bureau web site and check out those vacancy rate charts.
First of all, the Census Bureau is counting all 130.8 million "housing units" in the U.S. -- that's houses, apartments, condos, duplexes, and America's nearly 9 million mobile homes, all thrown in together. There's a big vacant subset of 4.8 million vacation homes, but USA Today already exed that out.
About a third of what's left is clearly the sad-sack housing that the scary headline implies: the home you bought two years ago and are now selling since you lost your job and had to move back in with your parents; the investment condo that you bought, hoping to rent it out, but then you couldn't find a renter; the mobile home that you used to live in and can't unload now that you've moved to a more structurally fixed house. Whatever those stories are, I get it: 6.3 million units sitting vacant is a lot. (Though it's not that much larger than America's number of ski cottages and beach houses.)
But 6.3 million out of 130.8 is only a 4.8 vacancy rate. So what else is USA Today counting?
It turns out the Census data can include new homes that have doors, windows, and floors but are not yet occupied. These homes might not be finished -- they might have floors but not kitchen sinks or bathroom cabinets -- but it's still possible to count them. Others might be in the limbo that is foreclosure, or a homeowner might be keeping a house off the market in order to repaint the interior and repolish the floors. Those are "equally" vacant in the eyes of the Census.
But "1 in 9 Homes is in Foreclosure or Is Getting a Paint Job or is Being Carried by the Investor until He Meets Reality and Lowers the Rent by $200" isn't much of a headline.
Don't get me wrong, a high vacancy rate is a sign of a recession, and recessions are painful. As USA Today reporter Haya El Nasser points out in her more detailed (and less-hyped) earlier column on vacancy rates, co-written with Paul Overberg, the overall vacancy rate is even higher than in the 1991 recession. The overhang of that much inventory is going to make it a little tougher to recover from where we are, and more likely that we'll bump along the bottom for a little while.
But an 11 percent vacancy rate is only slightly higher than average -- and that includes the housing boom of recent years, which has ranged from 9.6 percent in the fourth quarter of 2003 to 10.4 percent in the same quarter of 2007.
It's a stretch to say that no one is home. According to the Census Bureau, in the fourth quarter of 2008, 111.8 million households were home -- an increase of nearly 1 percent in the number of occupied households over the fourth quarter of the year before.
That's right, I said "an increase." America's growing. Come to think of it, that would make a pretty good headline.