By Peter Ricci
The housing vacancy rate is among the most important measures of the real estate recovery. After all, excess supply was one of the big side effects of the housing boom, as the preponderance of vacant homes wrecked havoc on property values and asking prices alike.
Now, however, there seems to be light at the end of the tunnel, and it was through an interesting method of research that Jed Kolko, Trulia’s chief economist, drew that conclusion.
Studying U.S. Postal Service monthly data, Kolko measured vacancy rates by how many homes were occupied, meaning, receiving mail, and found some promising data.
Housing Vacancies Disappearing
- Vacancies decline when the number of households outpaces the number of household units, and Post Office data suggests that trend has occurred.
- Year-over-year, the number of vacant housing units dropped by 5 percent nationally.
- As a percentage of all units, vacant units also fell, fell 3.6 percent to 3.4 percent.
- Also, in 90 of the nation’s 100 largest metros, vacancies have declined from last year.
What Does This Mean For U.S. Housing Inventory?
- Kolko also noted that the vacancy rate has a big impact on housing inventory, as the two are “strongly correlated.”
- A look at recent inventory trends confirms that: shadow inventory, as we just reported, is down 35 percent from its peak, and regular housing inventory dropped 24 percent year-over-year in June, the biggest annual drop in 30 years.
- Such inventory declines are good news for builders and especially home prices – Trulia’s own Price Monitor, in fact, has risen in four of the last five months; and what measure, you may ask, does it closely follow? Housing vacancies!
Vacancy rates are just the latest positive trend for housing. In addition to the best pricing data in months and huge increases in net orders for the nation’s largest homebuilders, things have been so rosy that the Oracle of Omaha himself, Warren Buffett, recently reaffirmed his commitment to housing.