The FINANCIAL — RealtyTrac on February 11 released its Q1 2016 U.S. Residential Property Vacancy Analysis, which shows that out of nearly 85 million residential properties (1 to 4 units) nationwide, more than 1.3 million (1.6 percent) were vacant at the beginning of February 2016, down 9.3 percent from the last residential property vacancy analysis in the third quarter of 2015.
The analysis used RealtyTrac’s publicly recorded real estate data — including foreclosure status (zombie foreclosures), owner-occupancy status, and equity — matched against monthly updated vacancy data from the U.S. Postal Service.
“With several notable exceptions, the challenge facing most U.S. real estate markets is not too many vacant homes but too few,” said Daren Blomquist, vice president at RealtyTrac. “The razor-thin vacancy rates in many markets are placing upward pressure on home prices and rents. While that may be good news for sellers and landlords, it is bad news for buyers and renters and could be bad news for all if prices and rents are inflated above tolerable affordability thresholds.”
Among 147 metropolitan statistical areas with at least 100,000 residential properties, those with the highest share of vacant properties were Flint, Michigan (7.5 percent), Detroit (5.3 percent), Youngstown, Ohio (4.4 percent), Beaumont-Port Arthur, Texas (3.8 percent), and Atlantic City, New Jersey (3.7 percent).
Other major metro areas with vacancy rates above the national average included Indianapolis (3.0 percent), Tampa (2.9 percent), Miami (2.8 percent), Cleveland (2.8 percent), and St. Louis (2.6 percent).
“Across the Ohio markets, occupancy demand is fueling a robust seller’s market for residential and commercial real estate,” said Michael Mahon, president at HER Realtors, covering the Ohio markets of Dayton, Columbus and Cincinnati. “With vacancy rates low, situations such as leasebacks and delayed occupancy are factors of concern in trying to get timing aligned for possession transfer in many communities. Couple this demand with the added necessary timing factors of the new Federal TRID disclosure process for 2016, and there is an even more heightened need for clear and consistent communication between buyers and sellers involving the timing and expectations of possession transfer regarding real estate transactions.”
Metro areas with the lowest share of vacant properties were San Jose, California (0.2 percent), Fort Collins, Colorado (0.2 percent), Manchester, New Hampshire (0.3 percent), Provo, Utah (0.3 percent), Lancaster, Pennsylvania (0.3 percent), and San Francisco (0.3 percent).
Other major metro areas with vacancy rates below the national average included San Francisco (0.3 percent), Los Angeles (0.4 percent), Boston (0.5 percent), Denver (0.5 percent), and Washington, D.C. (0.5 percent).
“Due to Seattle’s growing economy, high in-migration, and limited housing supply, it’s no surprise that our market has a low number of vacant homes relative to the national average,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, where the overall vacancy rate of 0.9 percent and the investment property vacancy rate of 2.4 percent were both more than 40 percent below the national average. “This is also true as it relates to investment property vacancies. Rents across the board are rising in Seattle, but single family home rentals in some areas are providing a more affordable option to traditional apartments.
“When considering the number of so called, ‘zombie foreclosures’ in Seattle, the reason for the slightly elevated level is due to the fact that banks continue to ‘cherry-pick’ which homes go to the front of the line when pursuing foreclosure proceedings,” Gardner continued. “In a market where values are increasing, these will be the homes that have regained positive equity. In aggregate, I anticipate that the level of zombie foreclosures in Seattle will continue to drop to historic average levels.”
Investment properties account for three-quarters of all vacant homes
Investment properties accounted for 76.7 percent (1,044,599) of all vacant properties nationwide. Among metro areas with at least 100,000 residential properties, those where investment properties accounted for the highest share of vacant homes were Myrtle Beach, South Carolina (95.0 percent), Barnstable, Massachusetts (93.5 percent), Salisbury, Maryland (91.9 percent), Lexington, Kentucky (91.8 percent), and Asheville, North Carolina (90.6 percent).
The report also found that investment properties are more likely to be vacant (4.3 percent vacancy rate nationwide), but investment property vacancy rates are 3 percent or below in more than one-third of U.S. markets — good news for landlords but bad news for renters in those markets.
Among metro areas with at least 100,000 residential properties, those with that highest share of vacant investment properties were Flint, Michigan (23.1 percent), Detroit (15.1 percent), Youngstown, Ohio (11.4 percent), South Bend, Indiana (10.9 percent), and Indianapolis (10.8 percent).
Metro areas with the lowest share of vacant investment properties were Fort Collins, Colorado (0.6 percent), San Jose, California (0.7 percent), Fayetteville, Arkansas (0.8 percent), Provo, Utah (0.9 percent), and San Francisco (0.9 percent).
Vacant “zombie” foreclosures down 4 percent nationwide, up in a minority of markets
Properties in the foreclosure process accounted for 1.5 percent (19,793) of all vacant properties nationwide, but the number of these “zombie” foreclosures was down 4 percent from a year ago when there were 20,575 nationwide.
States with the biggest increase in zombie foreclosures from a year ago included Massachusetts (up 167 percent), Oklahoma (up 89 percent), Michigan (up 71 percent), Arizona (up 52 percent), and New Jersey (up 49 percent).
Metro areas with the biggest increase in zombie foreclosures from a year ago included Worcester, Massachusetts (up 163 percent), Providence, Rhode Island (up 148 percent), Boston (up 111 percent), St. Louis (up 108 percent), and Detroit (up 71 percent).
Metro areas with the biggest increase in zombie foreclosures from a year ago included Worcester, Massachusetts (up 163 percent), Providence, Rhode Island (up 148 percent), Boston (up 111 percent), St. Louis (up 108 percent), and Detroit (up 71 percent).
