realtor® university speakers series presentation: long-term vacant housing in the united states

8/11/2019 REALTOR University Speakers Series Presentation: Long-Term Vacant Housing in the United States

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Long-Term Vacant Housing

in the United States

The analysis and conclusions set forth are those of the author and do not indicate concurrence

by other members of the research staff or the Board of Governors.

Raven Molloy

Federal Reserve Board of Governors

May 20, 2014


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Unintended vacancy reflects an imbalance between supply anddemand in the housing market.

Some amount of vacancy is normal as residents change. And some

houses are intended to be vacant for parts of the year.

Unintended vacancy reflects underutilization of the housing stock.

When structures stand vacant for a long time, there could be adverse

consequences for house prices and neighborhood quality.

In aggregate, the vacancy rate rose sharply during the housing market

contraction and has yet to return to pre-crisis levels.

Introduction


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Q1

8

9

10

11

12

13

14

15

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015year

Gross Vacancy Rate

Aggregate Vacancy Rate

Source. Housing Vacancy Survey.


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Q1

3

4

5

6

7

8

9

10

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015year

Vacancy Rate Excluding Seasonal and Occasionally Occupied Housing

Aggregate Vacancy Rate

Source. Housing Vacancy Survey.


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Goal of this project is to learn more about the vacant stock: What fraction of the aggregate rise in vacancy reflects imbalances

between supply and demand?

What types of locations have large imbalances between supply and

demand?

Measure imbalances between supply and demand using units

that have been vacant for a long time.

Short periods of vacancy could be due to normal turnover of residents.

Long periods of vacancy are more likely to be associated with adverse

effects on the neighborhood.

Introduction


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Aggregate statistics Long-term vacancy = units that have been vacant for an unusually long

period of time

What fraction of the rise in aggregate vacancy is due to long-term

vacancy?

Neighborhood-level statistics

Distribution of long-term vacancy across neighborhoods.

Characteristics of neighborhoods with large shares of long-term vacant

housing.

Agenda


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American Housing Survey Biennial panel dataset of housing units 1985 to 2011

Categorizes 6 reasons for vacancy:

For sale

For rent

Seasonal Usual Residence Elsewhere (URE)

Rented/sold but awaiting occupancy

Other

Length of vacancy

Detailed property characteristics

Exclude seasonal, Usual-Residence-Elsewhere and rented/sold.

Aggregate statistics


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Length of Vacancy, 1985 to 2003

For Rent For Sale Other

Percent of housing units vacant:

Less than 1 month 35.7 13.3 8.8

1 to 2 months 13.3 6.8 4.4

2 to 6 months 26.7 27.9 16.5

6 to 12 months 8.8 16.9 10.9

1 to 2 years 5.6 12.1 13.4

2 years or more 7.4 14.1 42.7

Never occupied 2.6 8.9 3.2

Percent of all vacant housing units 22.8 8.7 16.3


77% of units for sale vacant 12 months or less.

76% of units for rent vacant 6 months or less.

41% of other units vacant 12 months or less.


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Reasons for Other Vacancy in the 2012

Housing Vacancy Survey

Percent of Other

Vacant Stock

Personal/family reasons 19.7

Foreclosure 11.7

Legal proceedings 5.9

Possibly abandoned/to be demolished/condemned 6.7

Intended for year-round occupancy but vacant 6+ months 5.8

Being prepared to rent/sell 6.6

Needs repairs 13.9

Being repaired 9.3

Held for furniture storage 7.4

Held for Specific Use 1.0

Other/Dont know 11.3


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Presence of Negative Physical Characteristics by

Length of Vacancy for Other Vacant Units, 2001-2011

At least 1 At least 3 At least 5

Fraction of housing units vacant:

Less than 3 months 30.8 11.1 6.1

4 to 11 months 41.7 20.9 11.5

1 to 2 years 55.3 29.0 16.4

2 to 3 years 62.7 35.4 21.8

3 to 5 years 74.6 48.1 32.7

5 years or more 77.9 58.3 42.6

Aggregate statistics Owners that intend to leave a property vacant are more likely to maintain it, so

units left vacant unintentionally are more likely to be in a state of disrepair.

Presence of 19 physical characteristics associated with deterioration: Cracks in floors, walls or ceilings

Broken windows

Holes in roof

Incomplete plumbing

No heating equipment


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Long-term Vacant Units Over Time


Define long-term vacancy as:

Units for rent for more than 6 months Units for sale for more than 1 year

Other vacant units that have been vacant for more than 2 years

0

.005

.01

.015

.02

19851987198919911993199519971999200120032005200720092011

Other Vacant > 24 mo. For Sale > 12 mo. For Rent > 6 mo.


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Vacant stock rose from 12.9 million units in 2001 to 17.5 million units

in 2011 Increase = 4.6 million units, of which:

Seasonal/occasionally occupied = 2.0 million units

Long-term vacant = 1.1 million units

For rent < 6 months = 0.7 million units

Other vacant < 2 years = 0.6 million units

For sale < 2 years = 0.2 million units


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Geographic Distribution of Long-Term Vacancy Long-term vacancy is not a large fraction of the housing stock and

accounted for only of the rise in vacancy since 2001.

But implications for some neighborhoods could be substantial if thestock is concentrated in relatively few locations.

Neighborhood-level data from US Postal Service

Postal carriers report an address as vacant if mail has not been collected for atleast 90 days.

For each Census tract, HUD reports total number of vacant residential addressesby length of vacancy

Tract = geographic area with population size between 1,200 and 8,000; optimum size of 4,000.

Define long-term vacancy as vacant 2+ years Sample restrictions:

Exclude tracts with a large share of seasonal housing (2010 Census)

Exclude tracts with a number of housing units or a vacancy rate in 2010 that are not close toestimates in the 2010 Census.


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Geographic Distribution of Long-Term Vacancy

Final USPS sample is 52,000 tracts = roughly of tracts and housing

units in the US In the USPS data, 4 percent of addresses in 2013 had been vacant for

at least 2 years. This fraction is higher than the measure of long-term

vacancy in the American Housing Survey (AHS) because:

Some vacant addresses may be seasonal

AHS excludes housing units that have fallen into a state of severe disrepair.


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Most metropolitan areas have a stock of long-term vacant units that

is roughly proportional to the stock of occupied housing units.

Long-

Term

Vacan

tAddresses(

Log

Sca

le)

Occupied Addresses (Log Scale)

10000 100000 1.0e+061.0e+06 5.0e+06

500

1000

5000

10000

25000

50000

100000

50000

100000

300000

Abilene,

Akron, O

Albany,Albany-S

Albuquer

Alexandr

Allentow

Altoona,

Amarillo

Ames, IA

AndersonAnderson

Ann ArboAnniston

Appleton

Athens-C

Atlanta-

Auburn-O

Augusta- Austin-R

Bakersfi

Baltimor

Baton Ro

Battle C

Bay City

Beaumont

Billings

Binghamt

Birmingh

Bismarck

Blacksbu

BloomingBlooming

Boise Ci

Boston-C

Boulder,

Bowling

Bremerto Bridgepo

Buffalo-

BurlingtCanton-M

Cape Gir

Carson C

Casper,

Cedar Ra

ChampaigCharlest

Charlest

Charlott

Chattano

Cheyenne

Chicago-

Chico, C

Cincinna

Clarksvi

Clevelan

Clevelan

College

Colorado

Columbia

Columbia

Columbus

Columbus

Columbus

Corpus CCorvalli

Cumberla

Dallas-F

Dalton,

Danville

Danville

Davenpor

Dayton,

Decatur,

Decatur,

Denver-A

Des Moin

Detroit-

Dothan,Dover, D

Dubuque,

Durham-C

Eau Clai

Elizabet

Elkhart-

Elmira,

El Paso,Erie, PA

Eugene-S

Evansvil

Fairbank

Fargo, NFarmingt

Fayettev

FayettevFlint, M

Florence

Florence

Fond du

Fort Smi

Fort Way

Fresno,Gadsden,

Gainesvi

GainesviGoldsbor

Grand Fo

Grand Ju

Grand Ra

Great Fa

Greeley,

Greensbo

Greenvil

Greenvil

Gulfport

Hagersto

Hanford-

Harrisbu Hartford

Hattiesb

Hickory-

Hinesvil

Holland-

Honolulu

Houma-Ba

Houston-

Huntingt Huntsvil

Idaho Fa

Indianap

Iowa Cit

Ithaca,

Jackson,

Jackson,

Jackson,

Jacksonv

Janesvil

Jefferso

Johnson

JohnstowJonesbor

Joplin,

KalamazoKankakee

Kansas C

Kennewic

Killeen-Kingspor

Knoxvill

Kokomo,

La CrossLafayett

LafayettLake Cha

LancasteLansing-

Laredo,Las Cruc

Las Vega

Lawrence

Lawton,Lebanon,

Lewiston

Lewiston

Lexingto

Lima, OH

Lincoln,

Little R

Logan, U

LongviewLongview

Los Ange

Louisvil

Lubbock,

Lynchbur

Macon, G

Madison,

Manchest

Manhatta

Mankato-

Mansfiel

Medford,

Memphis,

Merced,

Midland,

Milwauke

Minneapo

Missoula

Mobile,

Modesto,

Monroe,

Monroe,

Montgome

Morganto Morristo

Muncie,

Muskegon

Nashvill

New HaveNew Orle

New York

Ocala, F

Odessa,Ogden-Cl

Oklahoma

Olympia,

Omaha-Co

Oshkosh-Owensbor

Oxnard-T

Parkersb

Pascagou

Pensacol

Peoria,

Philadel

Pine Blu

Pittsbur

Pocatell

Portland

Poughkee Providen

Provo-Or

Pueblo,

Racine,

Raleigh-

Rapid Ci

Reading,

Redding,

Reno-Spa

Richmond

Roanoke,

Rocheste

RochesteRockford

Rocky MoRome, GA

Saginaw-

St. Clou

St. Jose

St. Loui

Salem, O

SalisburSan Ange

San Anto

San Dieg

San Fran

San Jose

Santa Ba

Savannah

Scranton

Seattle-

SheboygaSherman-

Shrevepo

Sioux Ci

Sioux FaSouth Be

SpartanbSpokane,

Springfi

Springfi

Springfi

SpringfiSteubenv

Stockton

Sumter,

SyracuseTallahas

Terre Ha

Texarkan

Toledo,

Topeka,Trenton-

Tucson,

Tulsa, O

Tuscaloo

Tyler, T

Valdosta

Vallejo-

Vineland

Virginia

Visalia-

Waco, TX

Warner R

Washingt

WaterlooWausau,Wheeling

Wichita,

Wichita

Winston-

Worceste

Yakima,

York-Han

Youngsto

Yuba Cit


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Long-term vacancy varies much more by neighborhood.

Long-Term

Vacan

tAddresse

s(Log

Sca

le)

Occupied Addresses (Log Scale)

500 1000 2500 5000 10000

1

10

100

500

1000

2000


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Long-term vacancy varies much more by neighborhood.

Mean Mean + 1 Std. Dev.

0

.0

2

.04

.06

.08

-.02 0 .02 .04 .06 .08 .1 .12 .14 .16 .18 .2Long-Term Vacancy Rate in 2013


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Distribution by metropolitan area is much more symmetric.

Mean Mean + 1 Std. Dev.

0

.01

.02

.03

.04

.05

0 .01 .02 .03 .04 .05 .06 .07 .08 .09 .1 .11 .12 .13 .14Long-Term Vacancy Rate in 2013


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Characteristics of Tracts with High LT Vacancy

Characteristics of tracts can shed light on possible causes of long-

term vacancy.

Merge USPS data with tract characteristics from 2008-2012 American

Community Survey and the Census of 1990, 2000, and 2010.

Use principal component analysis to categorize tracts with a high

long-term vacancy rate into groups with similar characteristics.

Analysis generates 4 groups.


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Poor Inner-City tracts: Close to metropolitan area center

High density

High % multifamily housing

Low % owner-occupied housing

Low median income; high unemployment and poverty rate; high fraction of

residents without a high school degree

Net population decline 1990-2010

High vacancy rate in 1990


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Housing Boom tracts: Large % housing units built 2000-2009

High population growth 1990 to 2010

Far from metropolitan area center

Low density

High % owner-occupied housing


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Outlying tracts: Far from metropolitan area center

Large fraction of tracts in rural or micropolitan areas

Low density

% housing units built 2000-2009 not higher than average

Unemployment and poverty rates not that different from the typical tract


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Dense Suburban tracts: Average distance to metropolitan area center

Denser than the typical tract with less single-family and owner-occupied housing

Average population growth 1990-2010

Median income, poverty, and unemployment same as the typical tract, but alarger-than-normal fraction of college-educated residents

Vacancy rate in 1990 and 2000 not much higher than in the typical tract

Median house values and rents slightly higher than average.


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Characteristics of Tracts with High Long-Term Vacancy

Four groups have very different characteristics, so there is probablynot a single cause of long-term vacancy.

Poor Inner-City: characteristics of the population suggest that long-

term vacancy is related to poor economic conditions.

Housing boom: vacancy may be partly due to over-building during

the past 10 years.

Dense suburban: population characteristics not consistent with

poverty or urban decline, and not much evidence of overbuildingvacancy may be related to the severe economic recession.


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Characteristics of Tracts with High Long-Term Vacancy

Exact groupings of tracts depend on tract characteristics included,method of analysis, cutoff used to define a high long-term vacancy

rate.

In most cases, analysis identifies a housing boom group, an inner-

city group, and at least one suburban group.


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Where are Tracts with High Long-Term Vacancy?

Note. Map excludes metropolitan areas with fewer than 10 Census tracts.

High Long-Term Vacancy Tracts by Metropolitan Area


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Outlying Tracts by Metropolitan Area


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Dense Suburban Tracts by Metropolitan Area


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Long-term vacancy is not a large fraction of the aggregatehousing stock. Nor is it responsible for much of the increase

in the aggregate vacancy rate since 2001.

But long-term vacancy is concentrated in a small number ofneighborhoods with very high vacancy rates.

These neighborhoods are not concentrated in only a few typesof metropolitan areas.

The characteristics of these neighborhoods not all the same.

Some are locations on the edges of MSAs with a lot of constructionduring the housing boom.

Others are inner-city locations with poor economic fundamentalsi.e.low income and high poverty/unemployment.

And others are in dense suburban areas.

Summary


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In most neighborhoods, it is doubtful that a large stock of

long-term vacant housing is holding back the recovery in

prices or new construction.

But most metropolitan areas have at least a few

neighborhoods with a high long-term vacancy rate.

Because the neighborhoods that have high long-term vacancy

rates have diverse characteristics, the effectiveness of policies

aimed at reducing the long-term vacant stock will depend on

the type of neighborhood and metropolitan area being

considered.

Implications for todays housing market


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Thank You


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Gross Vacancy Rates Over Time

6

8

10

12

14

1950 1960 1970 1980 1990 2000 2010year

HVS AHS

ACS Census


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Year-Round Vacancy Rates Over Time

4

6

8

10

1950 1960 1970 1980 1990 2000 2010year

HVS AHS

ACS Census


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Fraction of

High Long-Term

Vacancy Tracts

Poor Inner City 35

Housing Boom 22

Outlying 20

Dense Suburban 18

Other 5

realtor® university speakers series presentation: long-term vacant housing in the united states

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