4 ms·

They're missing a bit of context here. It's normal for some units to be empty at any time for various reasons: remodelling, attempting to find a tenant, attempt

They're missing a bit of context here. It's normal for some units to be empty at any time for various reasons: remodelling, attempting to find a tenant, attempting to sell, waiting to be demolished/replaced, etc. So there's a baseline "normal" vacancy rate. If a unit is vacant for one month per year that would be an 8.3% vacancy rate. Certainly not all units turn over every year, particularly owner-occupied, but it's something to calibrate from. Another data point: the US nationwide average vacancy rate is 6.8%. I realize these are crowded cities and thus not entirely average, but that still gives us some baseline. The cities in the article have anywhere from 1.71% to 9% vacancy rates. 1.71% is actually a very tight market by most standards I've heard of - equivalent to 6 days of vacancy per year per unit. 9% is rather high vacancy, particularly in an expensive market, but not completely out of line. It seems like they may be overstating their case here. https://ycharts.com/indicators/us_rental_vacancy_rate https://ycharts.com/indicators/us_rental_vacancy_rate

throwaway2048 10y ago
Something to keep in mind, there is a lot of pressure to under-report vacancy rates, property managers benefit when vancancy is low.
- hyperpape 10y ago
  That only matters if the under-reporting is biased towards certain cities. If there's a general incentive, then the 6.8 average for the US is also lower than the real rate.
coldtea 10y ago
>It's normal for some units to be empty at any time for various reasons: remodelling, attempting to find a tenant, attempting to sell, waiting to be demolished/replaced, etc. So there's a baseline "normal" vacancy rate. Or, one can always count long term vacancies, and be done with the subtleties of not-actually-vacant homes...
vidarh 10y ago
I remember seeing numbers for London, where the "story" that gets regularly regurgitated that half the town is empty (ok, so I'm exaggerating a bit) due to the Chinese buying investment properties that they for some strange reason supposedly leave empty rather than renting (which would be particularly strange in the UK, which, though squatters rights have been curtailed still is one of the most risky places to leave property empty). Except the numbers showed vacancy rates at similar levels in expensive, "investment friendly" boroughs like Kensington and Chelsea compared to boroughs where large portions of the rental market is social housing where the council gets tenants in ASAP after cleanup/refurbishment. I'm sure there are areas with problems, but many pleases it seems to me that the problem is more one of flawed assumptions. E.g. articles about the situation in London have more than once talked about dark streets and no children out playing. But if there is one thing that has always been different between rich and poor areas, it is density and likelihood that the occupants will be spending money on activities away from home vs. playing around the block. I remember that distinction well even from growing up in Norway with class distinction far flatter than anywhere in London - the "normal" working class neighbourhoods I grew up in were lit and surrounded by kids playing outdoors in the evenings, while e.g. when I went to visit my grandparents in one of the wealthier parts of town, it was always darker - the flats in their building all had two living rooms and a couple of bedrooms with windows facing the road, and more rooms facing the inner courtyard. Even when people were home at night, there would be far less lit windows for the simple reason there were not enough people there to use all the rooms at once. It seemed to me like people had started from a flawed feeling, and gotten hold of the statistics and asked no critical questions whatsoever about why the numbers where similar in the poorer areas and similar for social housing. It's appealing story because it "explains" the high house prices people have to deal with by blaming it on some undefined evil absentee investor which won't show up to defend themselves. I'll note that I've not looked at the issues related to Paris etc.; maybe it's different there and they have a genuine issue, but even if these numbers were abnormally high, "solving" that problem would not in any case be enough to drive the house prices down to affordable levels - no matter what it's clear that if governments want these prices down to affordable levels, they either have to resort to regulation or to stimulate housebuilding, whether by easing regulations or pouring money into it. But it's much easier to blame people for leaving properties empty.
ryankupyn 10y ago
Do you know if the tax applies to homes vacant for any reason, or just homes that could be on the market but aren't? Otherwise I could imagine a particularly unwelcome situation where a market downturn or other shock leads to landlords being unable to rent their units, then get hit by both the loss of rent and the 60% tax on top of that.
- RangerScience 10y ago
  Hmm. While this is an excellent description of a downside, I don't know if it's ultimately a bad thing. You'd figure that in such a situation, the landlords are immensely incentivized to sell, or to lower rents, which may continue to be very unwelcome to them... ...but if the point is that real estate speculation is the problem, wouldn't the looming possibility of that situation result in less speculation, or very careful speculation? On the other hand, that would hit less wealthy landlords harder (larger percent of their wealth), encouraging them to sell, possibly simply driving more ownership to landlords with deep enough pockets to stomach the (temporary) losses? Complicated!
1_2__3 10y ago
I don't believe you're calculating vacancy rates the same way the article is. You're talking about single-unit vacancy over time, the article is referring to citywide vacancy over volume. Depending on how that number if calculated those could be wildly divergent values.
c2h5oh 10y ago
What really matters is what percentage of the vacant units are on the rental market. For example in Toronto based on official statistics rental vacancy is 1.2%. 2011 census provides the rest of the required data: there were 1,112,929 private dwellings in Toronto out of which 476,085 were rentals. 1.2% of that is 5,713 units, out of 100,000 estimated vacant. Imagine what difference on a rental market increasing available vacancies 15 or 20 times would make..
- cperciva 10y ago
  Be careful about those statistics. The official reported vacancy rates in Canada are usually for purpose-built rental accommodation, whereas a large (and increasing) proportion of the rental market is rental of condominiums and secondary suites.
spunwasi 10y ago
> If a unit is vacant for one month per year that would be an 8.3% vacancy rate. Generally most of the local governments in the data sets used only consider homes vacant if it's not considered someone's primary address. It's normal to have some vacancies (especially in a global city), but usually not that many. To contrast what a normal-ish number is, Paris has half as many vacant units as all of England. New York City has more than all of England. A large part of New York City's vacancies has to do with the last real estate crash there. I literally know people that can't remember where their place in New York City is, because they purchased it 15 years ago and didn't want to lose money. Now it just sits as a line item in their assets. Note: I wrote the article, so I'm bias in defense here.
- tmnvix 10y ago
  Regarding vacancy statistics, you will probably find this very interesting (it is an annual assessment of vacant dwellings in Melbourne, Australia): https://www.prosper.org.au/2015/12/09/speculative-vacancies-8/ https://www.prosper.org.au/2015/12/09/speculative-vacancies-...
  - spunwasi 10y ago
    That's amazing, thanks! I know it's a burning issue in Australia, but the ABS stats were practically antiques.

throwaway2048 10y ago

Something to keep in mind, there is a lot of pressure to under-report vacancy rates, property managers benefit when vancancy is low.

hyperpape 10y ago
That only matters if the under-reporting is biased towards certain cities. If there's a general incentive, then the 6.8 average for the US is also lower than the real rate.

coldtea 10y ago

>It's normal for some units to be empty at any time for various reasons: remodelling, attempting to find a tenant, attempting to sell, waiting to be demolished/replaced, etc. So there's a baseline "normal" vacancy rate. Or, one can always count long term vacancies, and be done with the subtleties of not-actually-vacant homes...

vidarh 10y ago

I remember seeing numbers for London, where the "story" that gets regularly regurgitated that half the town is empty (ok, so I'm exaggerating a bit) due to the Chinese buying investment properties that they for some strange reason supposedly leave empty rather than renting (which would be particularly strange in the UK, which, though squatters rights have been curtailed still is one of the most risky places to leave property empty). Except the numbers showed vacancy rates at similar levels in expensive, "investment friendly" boroughs like Kensington and Chelsea compared to boroughs where large portions of the rental market is social housing where the council gets tenants in ASAP after cleanup/refurbishment. I'm sure there are areas with problems, but many pleases it seems to me that the problem is more one of flawed assumptions. E.g. articles about the situation in London have more than once talked about dark streets and no children out playing. But if there is one thing that has always been different between rich and poor areas, it is density and likelihood that the occupants will be spending money on activities away from home vs. playing around the block. I remember that distinction well even from growing up in Norway with class distinction far flatter than anywhere in London - the "normal" working class neighbourhoods I grew up in were lit and surrounded by kids playing outdoors in the evenings, while e.g. when I went to visit my grandparents in one of the wealthier parts of town, it was always darker - the flats in their building all had two living rooms and a couple of bedrooms with windows facing the road, and more rooms facing the inner courtyard. Even when people were home at night, there would be far less lit windows for the simple reason there were not enough people there to use all the rooms at once. It seemed to me like people had started from a flawed feeling, and gotten hold of the statistics and asked no critical questions whatsoever about why the numbers where similar in the poorer areas and similar for social housing. It's appealing story because it "explains" the high house prices people have to deal with by blaming it on some undefined evil absentee investor which won't show up to defend themselves. I'll note that I've not looked at the issues related to Paris etc.; maybe it's different there and they have a genuine issue, but even if these numbers were abnormally high, "solving" that problem would not in any case be enough to drive the house prices down to affordable levels - no matter what it's clear that if governments want these prices down to affordable levels, they either have to resort to regulation or to stimulate housebuilding, whether by easing regulations or pouring money into it. But it's much easier to blame people for leaving properties empty.

ryankupyn 10y ago

Do you know if the tax applies to homes vacant for any reason, or just homes that could be on the market but aren't? Otherwise I could imagine a particularly unwelcome situation where a market downturn or other shock leads to landlords being unable to rent their units, then get hit by both the loss of rent and the 60% tax on top of that.

RangerScience 10y ago
Hmm. While this is an excellent description of a downside, I don't know if it's ultimately a bad thing. You'd figure that in such a situation, the landlords are immensely incentivized to sell, or to lower rents, which may continue to be very unwelcome to them... ...but if the point is that real estate speculation is the problem, wouldn't the looming possibility of that situation result in less speculation, or very careful speculation? On the other hand, that would hit less wealthy landlords harder (larger percent of their wealth), encouraging them to sell, possibly simply driving more ownership to landlords with deep enough pockets to stomach the (temporary) losses? Complicated!

1_2__3 10y ago

I don't believe you're calculating vacancy rates the same way the article is. You're talking about single-unit vacancy over time, the article is referring to citywide vacancy over volume. Depending on how that number if calculated those could be wildly divergent values.

c2h5oh 10y ago

What really matters is what percentage of the vacant units are on the rental market. For example in Toronto based on official statistics rental vacancy is 1.2%. 2011 census provides the rest of the required data: there were 1,112,929 private dwellings in Toronto out of which 476,085 were rentals. 1.2% of that is 5,713 units, out of 100,000 estimated vacant. Imagine what difference on a rental market increasing available vacancies 15 or 20 times would make..

cperciva 10y ago
Be careful about those statistics. The official reported vacancy rates in Canada are usually for purpose-built rental accommodation, whereas a large (and increasing) proportion of the rental market is rental of condominiums and secondary suites.

spunwasi 10y ago

> If a unit is vacant for one month per year that would be an 8.3% vacancy rate. Generally most of the local governments in the data sets used only consider homes vacant if it's not considered someone's primary address. It's normal to have some vacancies (especially in a global city), but usually not that many. To contrast what a normal-ish number is, Paris has half as many vacant units as all of England. New York City has more than all of England. A large part of New York City's vacancies has to do with the last real estate crash there. I literally know people that can't remember where their place in New York City is, because they purchased it 15 years ago and didn't want to lose money. Now it just sits as a line item in their assets. Note: I wrote the article, so I'm bias in defense here.

tmnvix 10y ago
Regarding vacancy statistics, you will probably find this very interesting (it is an annual assessment of vacant dwellings in Melbourne, Australia): https://www.prosper.org.au/2015/12/09/speculative-vacancies-8/ https://www.prosper.org.au/2015/12/09/speculative-vacancies-...
- spunwasi 10y ago
  That's amazing, thanks! I know it's a burning issue in Australia, but the ABS stats were practically antiques.