8 ms·

Millions of Homes Still Being Kept Vacant as Housing Costs Surge, Report Finds

79 points by isaacfrond 3y ago

anovikov 3y ago
5.7% is a very, very low vacancy rate indicating severe shortage. As it should be given prices.
- siquick 3y ago
  Sydney has a 0.9% vacancy rate for rentals at the moment.
  - dukeyukey 3y ago
    London is about 1%. I'm looking for a rental now, it's brutal.
- cool_dude85 3y ago
  How is your market for an essential commodity working if we need to have more than 6% of all inventory sitting around doing nothing, or else it's unaffordable?
  - ryukafalz 3y ago
    Let's say you had a 0% vacancy rate in an area. All housing units are full. Now let's say you want to move to that area, or you're a young adult moving out of your parents' house. How do you do it? If this doesn't seem reasonable to you, what vacancy rate would you find acceptable?
    - gniv 3y ago
      > How do you do it? Just for argument's sake, it can be done: Renters are supposed to give notice months in advance, so landlords can advertise during that time. (And yes, painting etc takes some time, but not that much.)
  - dukeyukey 3y ago
    if a property is empty for one month every two years, that's a 4.2% vacancy rate. That seems plenty reasonable - places need to be cleaned between tenancies, sometimes refurbished.
  - jeffbee 3y ago
    Easy. Housing is not a commodity.
    - gadflyinyoureye 3y ago
      The. What is it? A right? What does that mean? I have a right to speech in the US. The government doesn’t provide me a laptop and hosting. I have a right to keep arms. The government doesn’t give me a Ruger. Definition of a commodity. In economics, a commodity is defined as a tangible good that can be bought and sold or exchanged for products of similar value. Natural resources such as oil as well as basic foods like corn are two common types of commodities. Like other classes of assets such as stocks, commodities have value and can be traded on open markets. And like other assets, commodities can fluctuate in price according to supply and demand.
      - jeffbee 3y ago
        Housing does not meet any of the criteria to be a commodity. Commodities are undifferentiated bulk products widely available from many sources in which profits are minimal. Housing by contrast is completely unique owing to its location. Housing cannot be transported. Housing is not an easily substituted good. Sorghum is a commodity. The house at the corner of Grand and Lake is not a commodity.
chiefalchemist 3y ago
Helpful, I guess. But it feels like a case where aggregated data makes for a better narrative. For example, the article says, "About 26.6 percent of the nation’s vacant housing units are actively available for rent." Does that mean the landlords are having trouble finding qualified tenants? If so, then the real issue is the disconnect between inventory and what those seeking shelter can afford. A $5000 p/m unit being held back if 99% of those needing a place to live can't afford it. Housing availablity is like jobs creation. X new jobs? Ok. Whatever. But at what rate of pay? With what benefits? A job is not a transparent unit of measure. The devil in these things is in the details.
- ghaff 3y ago
  If you look at the report, there are a few cities like Miami that reasonably fit a fairly HCOL area narrative with good growth prospects. And some other, like Raleigh, that are smaller markets but have had pretty good growth in tech and otherwise. But there are a lot of cities on that list like New Orleans and Memphis where real estate affordability is presumably in the context of mediocre employment prospects and low wages. Housing affordability is almost always going to be an issue if you can't get a job in the location.
  - chiefalchemist 3y ago
    > Housing affordability is almost always going to be an issue if you can't get a job in the location. Perhaps. But supply (as in supply and demand) plays a key role as well. The ratio between higher-end and "affordable" seems to keep trending in the wrong direction. I'm not suggesting everyone should own a home, that's impracticable and economically dangerous. On the otherhand, too much of a resource (e.g., hoysing) controlled by too few hands has serious economic consequences. Perhaps, eventually, sociopolitical consequences.
    - ghaff 3y ago
      To put numbers to it, according to Zillow, the average New Orleans home value is $263,349, down 8.3% over the past year and goes to pending in around 53 days. (That's the city at the top of the list.) Obviously there are some large historic homes in Uptown that go for a lot more than that, but that doesn't really line up with the typical "housing in unaffordable" storyline except to the degree that--as is almost certainly the case in New Orleans--the job market is pretty poor in general.
digitalsushi 3y ago
in sleepy seacoast new hampshire I overheard a local with a sharp quip about the rich owners of vacant autumn luxury waterfront apartments: "it's not your presence we despise, it's your absence"
- briHass 3y ago
  Probably should be careful what they wish for. It seems to me that unused vacation properties are optimal for the residents: they pay much higher taxes as a secondary residence and they don't cause traffic or consume any resources.
  - linster 3y ago
    Except the space (opportunity cost) of building more housing
  - CuriouslyC 3y ago
    The community would rather either have cheaper housing for actual residents, or the wealthy person spending their money there regularly. What we have is the worst of both worlds.
    - briHass 3y ago
      When the wealthy vacation home owners actually take an interest in local politics and change the types of businesses (and pricing structure) through their upscale tastes and discretionary income, the residents are still unhappy. This is the classic $20 cheeseburger and martini bar problem in what used to be a blue collar town.
      - wrsh07 3y ago
        I don't think this is quite right Restaurants are a tough business, so towns with a high vacancy rate end up being unable to support very many restaurants. Forget the quality of the restaurant, lots of these places barely have any restaurants (or they're very seasonal) Honestly, I wonder if one could do a "benefit local business tax" where they tax the non primary residents and then just subsidize the types of local businesses they want to keep open (it's hard to design good systems for this though!)
lsmeducation 3y ago
I hear such conflicting information. For a normal looking new development, I hear that developers are looking to offload asap to recoup the investment. Certain markets in America make it almost seem as if these investors are willing to wait years for rates to come back up. I don't think Powell gives two fucks about the inflation or unemployment rate. Think he's very interested in cost of living and rent more than anything else. Housing prices barely have moved down at we're on the wrong side over 5%. If housing just thinks its going to wait this wait out and emerge from all of this with this inflated money house has left in tact, while the rest of get slammed by the waves, well ... well I guess I've seen dumber stuff. Housing needs to get hit for any of this to be worthing anything.
- willcipriano 3y ago
  Powell explicitly wants higher unemployment. The feds actions show they want high asset prices relative to wages. The plan is exactly as you describe. "Asset inflation good, wage inflation bad" is government policy at this point.
  - CuriouslyC 3y ago
    Asset inflation at this point is a runaway process caused by companies raising prices to cover increased costs and adding a margin for safety because of volatility. Companies in one area raising prices has a downstream effect, both in raising costs for other producers, and in allowing other producers to raise prices because of people's expectation of "inflation."
    - jjoonathan 3y ago
      You could use the same exact reasons to justify wage inflation while suppressing asset inflation lol. Of course, we know who has the power to get what they want. It's called capitalism for a reason.
    - Supermancho 3y ago
      > Asset inflation at this point is a runaway process caused by companies raising prices to cover increased costs and adding a margin for safety because of volatility Aka profit inflation, instead of wage inflation. https://www.youtube.com/watch?app=desktop&v=tU3rGFyN5uQ https://www.youtube.com/watch?app=desktop&v=tU3rGFyN5uQ
skybrian 3y ago
For the purpose of understanding how housing markets work, I don’t think homes that the owners use part of the year and aren’t offered for rent should count. It doesn’t seem like there’s any mystery about that? They own it for their own use. Some places have very seasonal demand. But the article also talks about some cities where there is housing for rent, but not at prices where anyone will rent it. That’s curious. It would be interesting to find out more about what’s going on there.
- nameless912 3y ago
  One big source of apartments being too expensive to rent is investment companies swooping in to buy apartment buildings, hoping the _building itself_ will appreciate in value, so that they can then sell it later at a profit. In this model, it's actually against the owner's interest to rent apartments because renters inevitably cause damage that needs fixing, which cuts into the owner's bottom line and makes the building less resellable. So, the solution is to charge exorbitant, insane above market rents; a small number of fools with more money than sense will rent at that price, and that will help cover loan interest costs, etc. in the meantime. With enough starting capital, renting to a few tenants at very high prices is a much better investment than renting to many tenants at market rates. You just hope that the building appreciates by a large margin in the next X years while your few, wealthy tenants pay your interest, and then you can sell the whole building to the next investor. Now, is this ethical? Abso-fucking-lutely not. Not only is it basically a bigger fool scam, it takes an extremely valuable and important commodity (housing) out of the market for no reason other than financial gain. I'm of the opinion that apartment buildings should be required to maintain 80% occupancy or risk having their apartments go rent controlled; if you aren't willing to rent at market rates in order to provide the service you claim to provide, you're taking housing away from people who need it, and you should be punished for it. Sure, you can argue that real estate is an investment and therefore these ghouls have the right to do this, but IMO becoming a landlord should come with the social responsibility to _increase_ housing supply and availability, not decrease it. If you're not willing to play by those rules you shouldn't be allowed to participate in the market.
  - shuckles 3y ago
whywhywhywhy 3y ago
> Because home-building became more expensive during the pandemic as a result of supply chain problems, developers tried to pass those prices off to renters to pay off loans. This seems to be completely ignoring inflation and hinting at a greed narrative.
- EGG_CREAM 3y ago
  I think it's just equating the two, which probably isn't wrong, considering the record profits made even as inflation has skyrocketed.[1] Making less profit is not an option for all of these businesses (because of greed), so they pass 100% of the inflation on to the consumer, and then some. [1] https://www.npr.org/2022/02/13/1080494838/economist-explains-record-corporate-profits-despite-rising-inflation https://www.npr.org/2022/02/13/1080494838/economist-explains...
picadores 3y ago
There is only one solution, for a virtual market, storing its value in a real world comodity, that real people can no longer afford. Create virtual people, who earn better and let them move in, with the poor real world citizens. Of course, the other solution would be increasing tax and just build massive oversupply of social housing- but that can not happen, as it would devalue the poker-chips, that are the stacks we life in.
- BazookaMusic 3y ago
  Your first solution is called being a landlord and renting
faet 3y ago
One issue is with how the census/fed defines vacancy. >A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent. In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere. New units not yet occupied are classified as vacant housing units if construction has reached a point where all exterior windows and doors are installed and final usable floors are in place. If a builder is building a house and it has a roof/windows/doors/floors but no occupancy permit, utilities are not hooked up, and there are no appliances/furniture that is counted as 'vacant' even though you technically can't live there. If I left an apartment today (12th) and my lease ends the 30th. Even if a lease is in place at the start of the next month that still counts as a vacancy. If I have a 2nd home I share with family/friends/short term lease that is generally occupied, it's still "vacant".
- jeffbee 3y ago
  This is the true math right here. An apartment that is occupied for a year, then takes a month to lease out again, results in an 8% vacancy rate. That’s just one of the reasons. People who think we can drive the vacancy rate down, even though it already stands at a record low, are crazy.
neom 3y ago
Tangentially: Vancouver has has an empty home tax for almost 5 years, this year the cities director of finance published a fairly long report that gives some insight on how it's going, including an EY report attached at the end. It's a long but pretty interesting read: https://council.vancouver.ca/20230510/documents/cfsc2.pdf https://council.vancouver.ca/20230510/documents/cfsc2.pdf (two things I pulled out, they've put $115MM toward affordable housing directly from the tax, and, empty properties fell 20% 2020-2021 and the same again 2021-2022 - worth reading the report)
- hnreport 3y ago
  They police this as about effectively as they do buying multiple commercial residential properties under a family member’s name.
- jeromegv 3y ago
  Toronto just started last year. 1% of the assessed property value, per year. They just voted yesterday to increase to 3%.
  - etimberg 3y ago
    Good! I'm in toronto and the real estate market is insane even after interest rate hikes
- waterheater 3y ago
  A little insight on Vancouver: PRC investment firms decided that the steady growth of the North American real estate market looked to provide great returns on investment. So, these firms started buying up large numbers of single-family homes in Vancouver. I've heard a few reasons for why they chose Vancouver: (1) the large amount of PRC nationals in Vancouver, (2) geographic proximity to the PRC (relative to other North American metropolitan areas), and (3) the closer relationship with the Canadian government (relative to the US). Now, the investment firms took a different approach. Many ordinary people and even real estate firms will try to rent out their secondary properties, particularly if the property is in a major metropolitan area. Here, the firms didn't rent out the properties for any reason. Their investment strategy decreased the total available housing supply (for anyone, including renters) while demand kept increasing, so the home prices naturally skyrocketed. They sat on the properties and rode the tide. The issue that Vancouver started encountering was that single-family homes on a regular residential block may be only 50% occupied. The end effect is you'd have families living on a regular ol' city block but with half the properties vacant, which destroys the development of community in that neighborhood. Also, because the Vancouver housing market pricing exploded, property taxes blew up, yet many residents' neighborhoods became a worse place to live. The housing market wasn't growing because of newfound desirability (e.g. Austin) or fresh industry (e.g. Atlanta and entertainment); in those cases, the new economic activity will provide benefit to the community in a variety of ways. The Vancouver situation only benefited the investment firms with no tangible benefit to the community. Residents became understandably upset. Hence, the empty home tax was passed to disincentivize the investment firms' predatory investment strategy.
mupuff1234 3y ago
It's crazy to me that housing is calculated as part of GDP - there's just something wrong about attaching a capitalistic value to someone having a roof above their head.
- deleted 3y ago
  [deleted]
- andsoitis 3y ago
  > It's crazy to me that housing is calculated as part of GDP According to the NAHB, housing contribution to GDP occurs in 2 ways: a) Residential investment (averaging roughly 3-5% of GDP), which includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees. b) Consumption spending on housing services (averaging roughly 12-13% of GDP), which includes gross rents and utilities paid by renters, as well as owners’ imputed rents and utility payments.
dilawar 3y ago
7 billion people, each having 1000sq feet house requires 651 thousands square km or land which is 0.43% of earth surface not covered in water.
- peteradio 3y ago
  1000 sq/ft per person is laughably huge. 1000 sq/ft/5person family is adequate.
- thfuran 3y ago
  1. That's significantly less than the total urban land area that already exists. 2. We have multistory buildings.
  - etiennebausson 3y ago
    Urban land include commercial & industrial urban land. So do, unless I am mistaken, urban roads and parkings.
michpoch 3y ago
There's a really nice solution that works well in Switzerland - you either pay tax from the actual rent or a tax on a virtual rent, if the property stays unoccupied. Vacant properties are around 1% here.
- is_true 3y ago
  Well played. How do they decide if a property is rentable?
  - michpoch 3y ago
    Why would it matter? If you keep paying the tax it'll be a good motivation to make it rentable or sell it to someone who can do it.
- jeffbee 3y ago
  Switzerland also has an imputed rent tax for owner-occupiers and a majority are renters. It’s an unusual market.
- userinanother 3y ago
  1% is insanely dysfunctionaly low. It doesn’t allow for units to stay vacant between tenants for repairs and cleaning. At 1% the unit is vacant for 3 days every year on average. That’s not enough time for basic things to be done and indicates an incredibly tight rental market
  - michpoch 3y ago
    > It doesn’t allow for units to stay vacant between tenants for repairs and cleaning. Cleaning is done by the previous tenant, or usually by a company the hire. Repairs are done on an on-going basis.
- HDThoreaun 3y ago
  1% vacancy rate is unequivocally bad. It means the rental market is far too tight and proper repairs are not being done.
frankbreetz 3y ago
Vacant Housing Units Near 20 year low and trending down[0]. Seems to indicate the opposite of what this article is saying. https://fred.stlouisfed.org/series/EVACANTUSQ176N https://fred.stlouisfed.org/series/EVACANTUSQ176N
tomohawk 3y ago
In our state, there's a lot of people who got burned during covid by people not paying rent and refusing to leave, and no realistic way to evict. There are still covid related restrictions on evictions in place. An acquaintance of mine has a kind heart and took in a homeless person. He's done this before on occasion. This time, the person is causing all kinds of problems and is unwilling to leave. He now has to live with this person in his house for a minimum of 6 months to get them evicted, even though no rent was ever paid or asked for. He's never going to take in people again. Nor will he ever rent out to anyone again. California Insider (channel killed by Youtube) documented how thousands of former rental units are sitting vacant in San Francisco because of issues like this. Increasing the risk to landlords even more than it already is will only reduce available rentals even more.
- lotsofpulp 3y ago
  This is also why you have to leave after x number of nights at a hotel in the US, where x is less than the number of nights it takes to qualify as a “permanent resident” in the hotel which would cause the hotel to have to go to court to evict them. It is usually 30 nights, but some states are up to 90 nights. The court system being unreliable and backed up for months is a travesty of its own that has myriad downstream effects in society, including incentivizing discrimination.
belligeront 3y ago
> looked at census data on the nation’s 50 largest metropolitan areas and found there are 5.47 million vacant housing units, with an average vacancy rate of 7.22 percent. This feels sensational. Imagine a common scenario: a unit is rented for 2 years (24 months), and then is vacant for 1 month while the owner repaints, performs maintenance, and relists the property for rental. That is 1/(24+1) = 4% vacancy. Given you can easily get to 4% vacancy with simple turnover, you can see why very low vacancy rates are bad for renters: they indicate it is extremely competitive to find housing. You can see this anecdotally in extremely tight housing markets like NYC where renters looking for apartments often report they need to move extremely quickly to secure rentals and some people even ofter to pay more than the listing price for desirable apartments.
- Retric 3y ago
  That example hit 4%, but that’s a long way from 7.22 percent. It’s common for rental properties to be occupied by the same tenants for 10 years or longer, 7.22% of that is 8.7+ months which suggests the 7.22% is further concentrated around shorter rental periods. It’s the same deal with unemployment, 7% is much worse than 4% even though the numbers aren’t that far apart because it’s a composite of a baseline and issues.
  - User23 3y ago
    Common, really? Have you got any kind of figures to back that up? Because anecdotally speaking neither I nor anyone known to me has ever rented for anywhere near ten years. I always get curious when claimed statistics greatly disagree with my experience.
    - woleium 3y ago
      I believe it varies significantly by demographic (older renters move less frequently)
    - Retric 3y ago
      Nationally yea, rent control is one reason. NYC has people living in the same apartments for 30+ years. Subsidized housing is another, the waiting list can be years long and people then generally stay until they are kicked out. It’s also age related, retired people have fewer reasons to move and families are harder to relocate. Further looking at individuals you don’t yet know how long they are going to be in that location. PS: 5.5% of renters have lived in their home for more than 20 years. Average is 3 years nationally at 7.22% that’s ~2.6 months between occupancy which seems long IMO.
nerdjon 3y ago
Something about this doesn't really make sense. I mean how often do we hear that there is a housing shortage? Either we are being lied to that there is a shortage or these numbers are not what they seem? It bothers me that in this article that in the same paragraph it mentions housing "deteriorating conditions" it gives percentages for housing in rent and being renovated, but ignores the percent for this important aspect? How much of this housing is actually in a livable state? Maybe the original report actually gives these numbers so I will need to look at this closer. But something about this really isn't adding up for me given what has been said time and time again over the last few years. Edit: Ok so it seems like the reason this article doesn't mention this percent is because the lending tree one doesn't either. If I am reading this correctly it is only explaining about 52% (26.61 + 17.04 + 7.98) of this number. So what is the reason for the other roughly 50%? That is a huge percent to be seemingly ignoring but still taking into account for an attention grabbing headline.
- danaris 3y ago
  I mean, we're being lied to that wages are causing inflation. We're being lied to that universal basic income will make people stop working. We were being lied to for decades that working from home was impossible. We were being lied to for decades that tax cuts for the rich will "trickle down" and help everyone else. It's abundantly clear that the powers that be in the economic world are some combination of willfully lying and self-deluded about how various parts of the country's and the world's economy actually work. It would not surprise me at all if the statistics showing a "housing shortage" were either shortsightedly or deliberately ignoring particular categories of vacant housing.
  - nerdjon 3y ago
    I get where you are going with this, but everything you mentioned is harder to concretely say one way or another. It takes studies, looking at numbers, and tests. But housing numbers are cut and dry. Worst case we have people who are trying to hide the numbers, but ultimately if the numbers can be found they are there. Gets a bit more complicated since you do need to account for wether or not there are people where those houses are and if the housing is in a livable state. But it isn't like you can add an opinion disclaimer to housing numbers.
local_crmdgeon 3y ago
This is housing trutherism - yes, there's a lot of vacant housing. These units are being renovated, are uninhabitable, are in areas that aren't really livable (a ton are in rural Upstate New York, and don't have heat for example). It's also still too small a % of total housing to create a proper liquid market. I've seen a liquid housing market, in KC - it's amazing. In NYC, it's fucking miserable to convince a landlord to let you suck them off to the tune of 6k a month. This is Flat Earth but for housing policy. Look at places that win the housing price war - they just build a shitload of housing. Houston, Dallas, increasingly MSP.
Eumenes 3y ago
I've seen an uptick of reporting on 'vacant homes' like the journalists are hinting at a confiscation of private property to house homeless people or something. This isn't Stalinist USSR - you can't seize peoples farms or property for collective use. Being a dreg on society does not entitle you to others earthly possessions. I disagree with an empty home tax as well - property taxes are already being paid. Ban foreign investors from buying homes/property, ban corporations from hording property, encourage housing development and curb commercial/retail expansion.
tamimio 3y ago
With Canada’s land to population ratio, each resident should have at least a private airfield and 100acre farm, and yet, people spend their whole lives paying mortgages for 1000 square feet sardines boxes called houses, and before they realize it, they gauge up the already abysmal prices so they can compensate their loss to milk the tenants, a never ending process to keep people busy when the land is empty and vacant all around us..
- local_crmdgeon 3y ago
  More suburban sprawl is not the answer. We're already seeing what happens when you build into fire areas, doing more of that is insanity. We should just fix our cities to meet the bare minimum of peer countries like Canada. Mexico is significantly better at cities than CA. Fucking Guatemala has better urbanism.
  - tamimio 3y ago
    > doing more of that is insanity. It is insanity because it’s being sprawled by the same developers and same regulations. Sure, fixing existing cities is better option but it’s unrealistic to do so, because you will need an authoritarian set of decisions that will never happen in a democratic government when 2/3 of your voters are home owners and already paid their life savings in that house and want the returns now, yeah, that fix will never happen, the realistic option is to use the already vacant land -that surprise surprise it’s actually owned by the crown!- with new sets of regulations to ease the crisis, or absolutely nothing will substantially change.
    - local_crmdgeon 3y ago
      >unrealistic to do so I'd argue that changed as of this morning: https://www.latimes.com/california/story/2023-10-11/carpenters-california-construction-union-labor-standards-scott-wiener-buffy-wicks-wages-workers https://www.latimes.com/california/story/2023-10-11/carpente...

79 points by isaacfrond 3y ago

anovikov 3y ago

5.7% is a very, very low vacancy rate indicating severe shortage. As it should be given prices.

siquick 3y ago
Sydney has a 0.9% vacancy rate for rentals at the moment.
- dukeyukey 3y ago
  London is about 1%. I'm looking for a rental now, it's brutal.
cool_dude85 3y ago
How is your market for an essential commodity working if we need to have more than 6% of all inventory sitting around doing nothing, or else it's unaffordable?
- ryukafalz 3y ago
  Let's say you had a 0% vacancy rate in an area. All housing units are full. Now let's say you want to move to that area, or you're a young adult moving out of your parents' house. How do you do it? If this doesn't seem reasonable to you, what vacancy rate would you find acceptable?
  - gniv 3y ago
    > How do you do it? Just for argument's sake, it can be done: Renters are supposed to give notice months in advance, so landlords can advertise during that time. (And yes, painting etc takes some time, but not that much.)
- dukeyukey 3y ago
  if a property is empty for one month every two years, that's a 4.2% vacancy rate. That seems plenty reasonable - places need to be cleaned between tenancies, sometimes refurbished.
- jeffbee 3y ago
  Easy. Housing is not a commodity.
  - gadflyinyoureye 3y ago
    The. What is it? A right? What does that mean? I have a right to speech in the US. The government doesn’t provide me a laptop and hosting. I have a right to keep arms. The government doesn’t give me a Ruger. Definition of a commodity. In economics, a commodity is defined as a tangible good that can be bought and sold or exchanged for products of similar value. Natural resources such as oil as well as basic foods like corn are two common types of commodities. Like other classes of assets such as stocks, commodities have value and can be traded on open markets. And like other assets, commodities can fluctuate in price according to supply and demand.
    - jeffbee 3y ago
      Housing does not meet any of the criteria to be a commodity. Commodities are undifferentiated bulk products widely available from many sources in which profits are minimal. Housing by contrast is completely unique owing to its location. Housing cannot be transported. Housing is not an easily substituted good. Sorghum is a commodity. The house at the corner of Grand and Lake is not a commodity.

chiefalchemist 3y ago

Helpful, I guess. But it feels like a case where aggregated data makes for a better narrative. For example, the article says, "About 26.6 percent of the nation’s vacant housing units are actively available for rent." Does that mean the landlords are having trouble finding qualified tenants? If so, then the real issue is the disconnect between inventory and what those seeking shelter can afford. A $5000 p/m unit being held back if 99% of those needing a place to live can't afford it. Housing availablity is like jobs creation. X new jobs? Ok. Whatever. But at what rate of pay? With what benefits? A job is not a transparent unit of measure. The devil in these things is in the details.

ghaff 3y ago
If you look at the report, there are a few cities like Miami that reasonably fit a fairly HCOL area narrative with good growth prospects. And some other, like Raleigh, that are smaller markets but have had pretty good growth in tech and otherwise. But there are a lot of cities on that list like New Orleans and Memphis where real estate affordability is presumably in the context of mediocre employment prospects and low wages. Housing affordability is almost always going to be an issue if you can't get a job in the location.
- chiefalchemist 3y ago
  > Housing affordability is almost always going to be an issue if you can't get a job in the location. Perhaps. But supply (as in supply and demand) plays a key role as well. The ratio between higher-end and "affordable" seems to keep trending in the wrong direction. I'm not suggesting everyone should own a home, that's impracticable and economically dangerous. On the otherhand, too much of a resource (e.g., hoysing) controlled by too few hands has serious economic consequences. Perhaps, eventually, sociopolitical consequences.
  - ghaff 3y ago
    To put numbers to it, according to Zillow, the average New Orleans home value is $263,349, down 8.3% over the past year and goes to pending in around 53 days. (That's the city at the top of the list.) Obviously there are some large historic homes in Uptown that go for a lot more than that, but that doesn't really line up with the typical "housing in unaffordable" storyline except to the degree that--as is almost certainly the case in New Orleans--the job market is pretty poor in general.

digitalsushi 3y ago

in sleepy seacoast new hampshire I overheard a local with a sharp quip about the rich owners of vacant autumn luxury waterfront apartments: "it's not your presence we despise, it's your absence"

briHass 3y ago
Probably should be careful what they wish for. It seems to me that unused vacation properties are optimal for the residents: they pay much higher taxes as a secondary residence and they don't cause traffic or consume any resources.
- linster 3y ago
  Except the space (opportunity cost) of building more housing
- CuriouslyC 3y ago
  The community would rather either have cheaper housing for actual residents, or the wealthy person spending their money there regularly. What we have is the worst of both worlds.
  - briHass 3y ago
    When the wealthy vacation home owners actually take an interest in local politics and change the types of businesses (and pricing structure) through their upscale tastes and discretionary income, the residents are still unhappy. This is the classic $20 cheeseburger and martini bar problem in what used to be a blue collar town.
    - wrsh07 3y ago
      I don't think this is quite right Restaurants are a tough business, so towns with a high vacancy rate end up being unable to support very many restaurants. Forget the quality of the restaurant, lots of these places barely have any restaurants (or they're very seasonal) Honestly, I wonder if one could do a "benefit local business tax" where they tax the non primary residents and then just subsidize the types of local businesses they want to keep open (it's hard to design good systems for this though!)

lsmeducation 3y ago

I hear such conflicting information. For a normal looking new development, I hear that developers are looking to offload asap to recoup the investment. Certain markets in America make it almost seem as if these investors are willing to wait years for rates to come back up. I don't think Powell gives two fucks about the inflation or unemployment rate. Think he's very interested in cost of living and rent more than anything else. Housing prices barely have moved down at we're on the wrong side over 5%. If housing just thinks its going to wait this wait out and emerge from all of this with this inflated money house has left in tact, while the rest of get slammed by the waves, well ... well I guess I've seen dumber stuff. Housing needs to get hit for any of this to be worthing anything.

willcipriano 3y ago
Powell explicitly wants higher unemployment. The feds actions show they want high asset prices relative to wages. The plan is exactly as you describe. "Asset inflation good, wage inflation bad" is government policy at this point.
- CuriouslyC 3y ago
  Asset inflation at this point is a runaway process caused by companies raising prices to cover increased costs and adding a margin for safety because of volatility. Companies in one area raising prices has a downstream effect, both in raising costs for other producers, and in allowing other producers to raise prices because of people's expectation of "inflation."
  - jjoonathan 3y ago
    You could use the same exact reasons to justify wage inflation while suppressing asset inflation lol. Of course, we know who has the power to get what they want. It's called capitalism for a reason.
  - Supermancho 3y ago
    > Asset inflation at this point is a runaway process caused by companies raising prices to cover increased costs and adding a margin for safety because of volatility Aka profit inflation, instead of wage inflation. https://www.youtube.com/watch?app=desktop&v=tU3rGFyN5uQ https://www.youtube.com/watch?app=desktop&v=tU3rGFyN5uQ

skybrian 3y ago

For the purpose of understanding how housing markets work, I don’t think homes that the owners use part of the year and aren’t offered for rent should count. It doesn’t seem like there’s any mystery about that? They own it for their own use. Some places have very seasonal demand. But the article also talks about some cities where there is housing for rent, but not at prices where anyone will rent it. That’s curious. It would be interesting to find out more about what’s going on there.

nameless912 3y ago
One big source of apartments being too expensive to rent is investment companies swooping in to buy apartment buildings, hoping the _building itself_ will appreciate in value, so that they can then sell it later at a profit. In this model, it's actually against the owner's interest to rent apartments because renters inevitably cause damage that needs fixing, which cuts into the owner's bottom line and makes the building less resellable. So, the solution is to charge exorbitant, insane above market rents; a small number of fools with more money than sense will rent at that price, and that will help cover loan interest costs, etc. in the meantime. With enough starting capital, renting to a few tenants at very high prices is a much better investment than renting to many tenants at market rates. You just hope that the building appreciates by a large margin in the next X years while your few, wealthy tenants pay your interest, and then you can sell the whole building to the next investor. Now, is this ethical? Abso-fucking-lutely not. Not only is it basically a bigger fool scam, it takes an extremely valuable and important commodity (housing) out of the market for no reason other than financial gain. I'm of the opinion that apartment buildings should be required to maintain 80% occupancy or risk having their apartments go rent controlled; if you aren't willing to rent at market rates in order to provide the service you claim to provide, you're taking housing away from people who need it, and you should be punished for it. Sure, you can argue that real estate is an investment and therefore these ghouls have the right to do this, but IMO becoming a landlord should come with the social responsibility to _increase_ housing supply and availability, not decrease it. If you're not willing to play by those rules you shouldn't be allowed to participate in the market.
- shuckles 3y ago

whywhywhywhy 3y ago

> Because home-building became more expensive during the pandemic as a result of supply chain problems, developers tried to pass those prices off to renters to pay off loans. This seems to be completely ignoring inflation and hinting at a greed narrative.

EGG_CREAM 3y ago
I think it's just equating the two, which probably isn't wrong, considering the record profits made even as inflation has skyrocketed.[1] Making less profit is not an option for all of these businesses (because of greed), so they pass 100% of the inflation on to the consumer, and then some. [1] https://www.npr.org/2022/02/13/1080494838/economist-explains-record-corporate-profits-despite-rising-inflation https://www.npr.org/2022/02/13/1080494838/economist-explains...

picadores 3y ago

There is only one solution, for a virtual market, storing its value in a real world comodity, that real people can no longer afford. Create virtual people, who earn better and let them move in, with the poor real world citizens. Of course, the other solution would be increasing tax and just build massive oversupply of social housing- but that can not happen, as it would devalue the poker-chips, that are the stacks we life in.

BazookaMusic 3y ago
Your first solution is called being a landlord and renting

faet 3y ago

One issue is with how the census/fed defines vacancy. >A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent. In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere. New units not yet occupied are classified as vacant housing units if construction has reached a point where all exterior windows and doors are installed and final usable floors are in place. If a builder is building a house and it has a roof/windows/doors/floors but no occupancy permit, utilities are not hooked up, and there are no appliances/furniture that is counted as 'vacant' even though you technically can't live there. If I left an apartment today (12th) and my lease ends the 30th. Even if a lease is in place at the start of the next month that still counts as a vacancy. If I have a 2nd home I share with family/friends/short term lease that is generally occupied, it's still "vacant".

jeffbee 3y ago
This is the true math right here. An apartment that is occupied for a year, then takes a month to lease out again, results in an 8% vacancy rate. That’s just one of the reasons. People who think we can drive the vacancy rate down, even though it already stands at a record low, are crazy.

neom 3y ago

Tangentially: Vancouver has has an empty home tax for almost 5 years, this year the cities director of finance published a fairly long report that gives some insight on how it's going, including an EY report attached at the end. It's a long but pretty interesting read: https://council.vancouver.ca/20230510/documents/cfsc2.pdf https://council.vancouver.ca/20230510/documents/cfsc2.pdf (two things I pulled out, they've put $115MM toward affordable housing directly from the tax, and, empty properties fell 20% 2020-2021 and the same again 2021-2022 - worth reading the report)

hnreport 3y ago
They police this as about effectively as they do buying multiple commercial residential properties under a family member’s name.
jeromegv 3y ago
Toronto just started last year. 1% of the assessed property value, per year. They just voted yesterday to increase to 3%.
- etimberg 3y ago
  Good! I'm in toronto and the real estate market is insane even after interest rate hikes
waterheater 3y ago
A little insight on Vancouver: PRC investment firms decided that the steady growth of the North American real estate market looked to provide great returns on investment. So, these firms started buying up large numbers of single-family homes in Vancouver. I've heard a few reasons for why they chose Vancouver: (1) the large amount of PRC nationals in Vancouver, (2) geographic proximity to the PRC (relative to other North American metropolitan areas), and (3) the closer relationship with the Canadian government (relative to the US). Now, the investment firms took a different approach. Many ordinary people and even real estate firms will try to rent out their secondary properties, particularly if the property is in a major metropolitan area. Here, the firms didn't rent out the properties for any reason. Their investment strategy decreased the total available housing supply (for anyone, including renters) while demand kept increasing, so the home prices naturally skyrocketed. They sat on the properties and rode the tide. The issue that Vancouver started encountering was that single-family homes on a regular residential block may be only 50% occupied. The end effect is you'd have families living on a regular ol' city block but with half the properties vacant, which destroys the development of community in that neighborhood. Also, because the Vancouver housing market pricing exploded, property taxes blew up, yet many residents' neighborhoods became a worse place to live. The housing market wasn't growing because of newfound desirability (e.g. Austin) or fresh industry (e.g. Atlanta and entertainment); in those cases, the new economic activity will provide benefit to the community in a variety of ways. The Vancouver situation only benefited the investment firms with no tangible benefit to the community. Residents became understandably upset. Hence, the empty home tax was passed to disincentivize the investment firms' predatory investment strategy.

mupuff1234 3y ago

It's crazy to me that housing is calculated as part of GDP - there's just something wrong about attaching a capitalistic value to someone having a roof above their head.

deleted 3y ago
[deleted]
andsoitis 3y ago
> It's crazy to me that housing is calculated as part of GDP According to the NAHB, housing contribution to GDP occurs in 2 ways: a) Residential investment (averaging roughly 3-5% of GDP), which includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees. b) Consumption spending on housing services (averaging roughly 12-13% of GDP), which includes gross rents and utilities paid by renters, as well as owners’ imputed rents and utility payments.

dilawar 3y ago

7 billion people, each having 1000sq feet house requires 651 thousands square km or land which is 0.43% of earth surface not covered in water.

peteradio 3y ago
1000 sq/ft per person is laughably huge. 1000 sq/ft/5person family is adequate.
thfuran 3y ago
1. That's significantly less than the total urban land area that already exists. 2. We have multistory buildings.
- etiennebausson 3y ago
  Urban land include commercial & industrial urban land. So do, unless I am mistaken, urban roads and parkings.

michpoch 3y ago

There's a really nice solution that works well in Switzerland - you either pay tax from the actual rent or a tax on a virtual rent, if the property stays unoccupied. Vacant properties are around 1% here.

is_true 3y ago
Well played. How do they decide if a property is rentable?
- michpoch 3y ago
  Why would it matter? If you keep paying the tax it'll be a good motivation to make it rentable or sell it to someone who can do it.
jeffbee 3y ago
Switzerland also has an imputed rent tax for owner-occupiers and a majority are renters. It’s an unusual market.
userinanother 3y ago
1% is insanely dysfunctionaly low. It doesn’t allow for units to stay vacant between tenants for repairs and cleaning. At 1% the unit is vacant for 3 days every year on average. That’s not enough time for basic things to be done and indicates an incredibly tight rental market
- michpoch 3y ago
  > It doesn’t allow for units to stay vacant between tenants for repairs and cleaning. Cleaning is done by the previous tenant, or usually by a company the hire. Repairs are done on an on-going basis.
HDThoreaun 3y ago
1% vacancy rate is unequivocally bad. It means the rental market is far too tight and proper repairs are not being done.

frankbreetz 3y ago

Vacant Housing Units Near 20 year low and trending down[0]. Seems to indicate the opposite of what this article is saying. https://fred.stlouisfed.org/series/EVACANTUSQ176N https://fred.stlouisfed.org/series/EVACANTUSQ176N

tomohawk 3y ago

In our state, there's a lot of people who got burned during covid by people not paying rent and refusing to leave, and no realistic way to evict. There are still covid related restrictions on evictions in place. An acquaintance of mine has a kind heart and took in a homeless person. He's done this before on occasion. This time, the person is causing all kinds of problems and is unwilling to leave. He now has to live with this person in his house for a minimum of 6 months to get them evicted, even though no rent was ever paid or asked for. He's never going to take in people again. Nor will he ever rent out to anyone again. California Insider (channel killed by Youtube) documented how thousands of former rental units are sitting vacant in San Francisco because of issues like this. Increasing the risk to landlords even more than it already is will only reduce available rentals even more.

lotsofpulp 3y ago
This is also why you have to leave after x number of nights at a hotel in the US, where x is less than the number of nights it takes to qualify as a “permanent resident” in the hotel which would cause the hotel to have to go to court to evict them. It is usually 30 nights, but some states are up to 90 nights. The court system being unreliable and backed up for months is a travesty of its own that has myriad downstream effects in society, including incentivizing discrimination.

belligeront 3y ago

> looked at census data on the nation’s 50 largest metropolitan areas and found there are 5.47 million vacant housing units, with an average vacancy rate of 7.22 percent. This feels sensational. Imagine a common scenario: a unit is rented for 2 years (24 months), and then is vacant for 1 month while the owner repaints, performs maintenance, and relists the property for rental. That is 1/(24+1) = 4% vacancy. Given you can easily get to 4% vacancy with simple turnover, you can see why very low vacancy rates are bad for renters: they indicate it is extremely competitive to find housing. You can see this anecdotally in extremely tight housing markets like NYC where renters looking for apartments often report they need to move extremely quickly to secure rentals and some people even ofter to pay more than the listing price for desirable apartments.

Retric 3y ago
That example hit 4%, but that’s a long way from 7.22 percent. It’s common for rental properties to be occupied by the same tenants for 10 years or longer, 7.22% of that is 8.7+ months which suggests the 7.22% is further concentrated around shorter rental periods. It’s the same deal with unemployment, 7% is much worse than 4% even though the numbers aren’t that far apart because it’s a composite of a baseline and issues.
- User23 3y ago
  Common, really? Have you got any kind of figures to back that up? Because anecdotally speaking neither I nor anyone known to me has ever rented for anywhere near ten years. I always get curious when claimed statistics greatly disagree with my experience.
  - woleium 3y ago
    I believe it varies significantly by demographic (older renters move less frequently)
  - Retric 3y ago
    Nationally yea, rent control is one reason. NYC has people living in the same apartments for 30+ years. Subsidized housing is another, the waiting list can be years long and people then generally stay until they are kicked out. It’s also age related, retired people have fewer reasons to move and families are harder to relocate. Further looking at individuals you don’t yet know how long they are going to be in that location. PS: 5.5% of renters have lived in their home for more than 20 years. Average is 3 years nationally at 7.22% that’s ~2.6 months between occupancy which seems long IMO.

nerdjon 3y ago

Something about this doesn't really make sense. I mean how often do we hear that there is a housing shortage? Either we are being lied to that there is a shortage or these numbers are not what they seem? It bothers me that in this article that in the same paragraph it mentions housing "deteriorating conditions" it gives percentages for housing in rent and being renovated, but ignores the percent for this important aspect? How much of this housing is actually in a livable state? Maybe the original report actually gives these numbers so I will need to look at this closer. But something about this really isn't adding up for me given what has been said time and time again over the last few years. Edit: Ok so it seems like the reason this article doesn't mention this percent is because the lending tree one doesn't either. If I am reading this correctly it is only explaining about 52% (26.61 + 17.04 + 7.98) of this number. So what is the reason for the other roughly 50%? That is a huge percent to be seemingly ignoring but still taking into account for an attention grabbing headline.

danaris 3y ago
I mean, we're being lied to that wages are causing inflation. We're being lied to that universal basic income will make people stop working. We were being lied to for decades that working from home was impossible. We were being lied to for decades that tax cuts for the rich will "trickle down" and help everyone else. It's abundantly clear that the powers that be in the economic world are some combination of willfully lying and self-deluded about how various parts of the country's and the world's economy actually work. It would not surprise me at all if the statistics showing a "housing shortage" were either shortsightedly or deliberately ignoring particular categories of vacant housing.
- nerdjon 3y ago
  I get where you are going with this, but everything you mentioned is harder to concretely say one way or another. It takes studies, looking at numbers, and tests. But housing numbers are cut and dry. Worst case we have people who are trying to hide the numbers, but ultimately if the numbers can be found they are there. Gets a bit more complicated since you do need to account for wether or not there are people where those houses are and if the housing is in a livable state. But it isn't like you can add an opinion disclaimer to housing numbers.

local_crmdgeon 3y ago

This is housing trutherism - yes, there's a lot of vacant housing. These units are being renovated, are uninhabitable, are in areas that aren't really livable (a ton are in rural Upstate New York, and don't have heat for example). It's also still too small a % of total housing to create a proper liquid market. I've seen a liquid housing market, in KC - it's amazing. In NYC, it's fucking miserable to convince a landlord to let you suck them off to the tune of 6k a month. This is Flat Earth but for housing policy. Look at places that win the housing price war - they just build a shitload of housing. Houston, Dallas, increasingly MSP.

Eumenes 3y ago

I've seen an uptick of reporting on 'vacant homes' like the journalists are hinting at a confiscation of private property to house homeless people or something. This isn't Stalinist USSR - you can't seize peoples farms or property for collective use. Being a dreg on society does not entitle you to others earthly possessions. I disagree with an empty home tax as well - property taxes are already being paid. Ban foreign investors from buying homes/property, ban corporations from hording property, encourage housing development and curb commercial/retail expansion.

tamimio 3y ago

With Canada’s land to population ratio, each resident should have at least a private airfield and 100acre farm, and yet, people spend their whole lives paying mortgages for 1000 square feet sardines boxes called houses, and before they realize it, they gauge up the already abysmal prices so they can compensate their loss to milk the tenants, a never ending process to keep people busy when the land is empty and vacant all around us..

local_crmdgeon 3y ago
More suburban sprawl is not the answer. We're already seeing what happens when you build into fire areas, doing more of that is insanity. We should just fix our cities to meet the bare minimum of peer countries like Canada. Mexico is significantly better at cities than CA. Fucking Guatemala has better urbanism.
- tamimio 3y ago
  > doing more of that is insanity. It is insanity because it’s being sprawled by the same developers and same regulations. Sure, fixing existing cities is better option but it’s unrealistic to do so, because you will need an authoritarian set of decisions that will never happen in a democratic government when 2/3 of your voters are home owners and already paid their life savings in that house and want the returns now, yeah, that fix will never happen, the realistic option is to use the already vacant land -that surprise surprise it’s actually owned by the crown!- with new sets of regulations to ease the crisis, or absolutely nothing will substantially change.
  - local_crmdgeon 3y ago
    >unrealistic to do so I'd argue that changed as of this morning: https://www.latimes.com/california/story/2023-10-11/carpenters-california-construction-union-labor-standards-scott-wiener-buffy-wicks-wages-workers https://www.latimes.com/california/story/2023-10-11/carpente...