It’s no secret that the U.S. housing market has seen better days. From falling home values and impaired labor mobility to backed-up inventories and a flood of foreclosures, the real-estate downturn has affected the economy at large in countless ways.
One of the unfortunate results of a bad housing market are empty homes. Vacant properties have increased by 43.8 percent nationwide since 2000, according to the Census Bureau. Homes can be vacant for many reasons, but are defined by the bureau as both unoccupied rental inventory as well as homes that are unoccupied and “for sale.” As of 2011, there were about 14.3 million year-round vacant housing units in the country, with a 10.6 percent gross vacancy rate that excludes seasonal vacancies such as vacation homes.
Earlier this year, the Cleveland Federal Reserve analyzed the impact of foreclosed and vacant homes on the surrounding communities. The study found that a vacant or tax delinquent house decreases the value of nearby homes by at least 1.3 percent, thanks to poor maintenance, and because the empty makes the neighborhood appear less desirable.
This effect is amplified in higher-income neighborhoods where a vacancy or foreclosure has a negative price impact of 4.6 percent. In low poverty areas, each additional vacant or tax delinquent home was found to reduce values of surrounding properties by between 1.7 percent and 1.8 percent.
Each quarter, the Census Bureau publishes data on homeowner and rental vacancies in the 75 largest cities. Listed here are the 10 cities with the most vacancies, using a weighted ranking of both rental and homeowner vacancies based on a 12-month average of both kinds of vacancy rates to smooth out sampling errors. Weights are assigned to rental and homeowner vacancies according to the national proportion of homes to rental properties in the U.S. Our list reveals the most significant outliers in both categories relative to other major U.S. cities.
10. Toledo, Ohio
12-Month Averages:
Rental vacancy rate: 11.5 percent
Homeowner vacancy rate: 3.8 percent
Of the 75 largest U.S. cities in the first quarter of 2012, Toledo recorded the highest rate for homeowner vacancies, at 5.6 percent. However, in three of the past four quarters listed by the Census Bureau, that rate has hovered between 3 and 3.6 percent, significantly bringing down the city’s 12 month average, and its overall ranking in this list. Regardless, the 3.8 percent 12 month average still ranks Toledo as the fifth highest in the country for homeowner vacancies alone.
9. Tampa, Fla.
12-Month Averages:
Rental vacancy rate: 12.8 percent
Homeowner vacancy rate: 3.2 percent
It’s no secret that the Florida real estate market has seen better times — and the situation in Tampa appears to be getting worse. In May, RealtyTrac reported that foreclosure activity in the Tampa-St. Petersburg-Clearwater area rose by nearly 111 percent from May 2011, with one home in every 304 in foreclosure. The rental vacancy market has been following this downward trend, with the rental vacancy rate going up or remaining flat every quarter since the beginning of 2011.
8. Houston
12-Month Averages:
Rental vacancy rate: 15.5 percent
Homeowner vacancy rate: 1.9 percent
Houston is home to the nation’s third-highest rental vacancy rate over the past 12 months, standing at 15.5 percent. The city hit a three-year high for rental vacancies in 2009, when the rate rose to 18.4 percent in the third quarter of that year, according to Census Bureau data. However, Houston’s homeowner vacancy rate has been recovering, dropping below the average for the 75 largest cities for the past three quarters to as low as 1.1 percent at the end of 2011.
CNBC.com: Most expensive states to live in 2012
7. Atlanta
12-Month Averages:
Rental vacancy rate: 11.3 percent
Homeowner vacancy rate: 4.2 percent
Atlanta’s average homeowner vacancy rate is the third-highest among major U.S. cities, standing at 4.2 percent. Fortunately for Atlanta, the rate has been dropping since early 2011, when it stood at 5.4 percent. The trend for rental vacancies has been worse for Atlanta, however, rising from 9.4 percent in the third quarter of 2011 to 12.4 percent in the first quarter of 2012.
6. Las Vegas
12-Month Averages:
Rental vacancy rate: 11.9 percent
Homeowner vacancy rate: 3.9 percent
Over the past five years, the Las Vegas housing market has experienced one of the country’s most dramatic boom-and-bust cycles. The city continues to feel the pain. At the end of 2011, Las Vegas ranked second in the country for gross vacancy rates, at 16 percent, and currently has an unemployment rate of 11.8 percent.
In the past 12 months, Las Vegas’ rental vacancy rates have dropped from a high of 13.2 percent in the third quarter of 2011 to a low of 11 percent in the first quarter of 2012, the most recent number available. Although Las Vegas remains one of the most vacant U.S. cities, homeowner vacancies are a bright spot, dropping from 5.5 percent over the past year to 2.3 percent in the most recent quarter.
CNBC.com: New crop of foreclosures is coming
5. Richmond, Va.
12-Month Averages:
Rental vacancy rate: 15.1 percent
Homeowner vacancy rate: 2.4 percent
With a rental vacancy rate of 15.1 percent, Virginia's capital ranks fourth among all major U.S. cities for empty rentals over the past year, with the first quarter of 2012 showing a 19 percent rental vacancy rate. However, Richmond’s homeowner vacancy rate ranks only 27th among the country’s 75 largest metro areas, and stands just 0.2 percent higher than the average for large metro areas.
4. Detroit
12-Month Averages:
Rental vacancy rate: 16.9 percent
Homeowner vacancy rate: 1.7 percent
Detroit was one of the hardest hit cities in the recession, and with an unemployment rate of 9.9 percent as of May, it's little wonder that its 16.9 percent rental vacancy rate is the second highest in the country. Surprisingly, though, the homeowner vacancy rate remains below the 75 largest metro area's average of 2.18 percent. According to the Census Bureau, at the end of 2011, Detroit had a gross vacancy rate of 12.2 percent, a level the city has virtually maintained since 2006.
CNBC.com: Cities with the best real estate deals
3. Memphis, Tenn.
12-Month Averages:
Rental vacancy rate: 15 percent
Homeowner vacancy rate: 3.1 percent
Memphis's proportion of vacant homes, both owned and rentals, puts it third overall, thanks to an average rental vacancy rate of 15 percent that is the fifth highest in the nation and the 3.1 percent homeowner vacancy rate that ranks 13th.
2. Dayton, Ohio
12-Month Averages:
Rental vacancy rate: 11.3 percent
Homeowner vacancy rate: 5.4 percent
The good news is that Dayton's homeowner vacancy rate has been trending downward since its peak in the third quarter of 2011, when it stood at 6.5 percent.
However, even this improving number gives Dayton the distinction of having the highest average homeowner vacancy rate in the country, according to the Census Data. And Dayton’s average rental vacancy rate, at 11.3 percent, is higher than the 75 city average of 9.2 percent. The Census Bureau calculations put Dayton’s gross vacancy rate at 16.9 percent, more than 6 percent above the large city average, and the highest in the country.
CNBC.com: Home price bottom or bubble?
1. Orlando, Fla.
12-Month Averages:
Rental vacancy rate: 18.8 percent
Homeowner vacancy rate: 2.2 percent
The emptiest city in the United States is Orlando, Fla. The 12-month average for rental vacancies stands at a staggering 18.8 percent, while in the first quarter of 2012 this number was 22 percent, highest in the nation. Florida's third largest city also has an above-average homeowner vacancy rate, but this metric has been rising during the past two quarters, according to Census Bureau data.
Despite its housing woes, Orlando has been able to avoid the financial woes of other cities, such as Harrisburg, Pa., and San Bernardino and Stockton, Calif. According to Orlando’s most recent annual report, the city has more than $125 million of cash in its general fund and over $1.1 billion in total assets (including nearly an additional $300 million in cash and cash equivalents in other funds), compared with just under $600 million in total listed liabilities.
More money and business news: