Long-Term Vacant Housing in the United States
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Long-Term Vacant Housing in the United States

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Presented by Raven Molloy, Federal Reserve Board of Governors, on May 20, 2014, as part of the REALTOR® University Lecture Series

Presented by Raven Molloy, Federal Reserve Board of Governors, on May 20, 2014, as part of the REALTOR® University Lecture Series

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  • Share of other vacant was up to 19 percent in 2011.
  • LT vacancy rose from 1.5% of housing stock in 2001 to 2 percent in 2011.
  • LT vacancy rose from 1.5% of housing stock in 2001 to 2 percent in 2011. Increase of 1 million housing units is only about ¼ of aggregate increase in vacant stock. About half of the increase in the vacant stock is due to seasonal or occasionally occupied units, while the rest is split between rental units that are vacant between 2 and 6 months and units in the other vacant category for 6 months to 2 years
  • Addresses vacant for 2+ years are 2/3 of the AHS LT vacant stock. Homes vacant for 1+ years are 85%.
  • Addresses vacant for 2+ years are 2/3 of the AHS LT vacant stock. Homes vacant for 1+ years are 85%.
  • LT vacancy rose from 1.5% of housing stock in 2001 to 2 percent in 2011. Increase of 1 million housing units is only about ¼ of aggregate increase in vacant stock. Most of the increase in the vacant stock is due to rental units that are vacant for a short period of time and units in the other vacant category < 6 months.
  • LT vacancy rose from 1.5% of housing stock in 2001 to 2 percent in 2011. Increase of 1 million housing units is only about ¼ of aggregate increase in vacant stock. Most of the increase in the vacant stock is due to rental units that are vacant for a short period of time and units in the other vacant category < 6 months.
  • 2/3 of tracts below the mean, 14% have a vacancy rate more than 1 std dev above the mean. In those tracts, median vacancy rate was 12 percent. About ¼ of tracts had a vacancy rate more than twice the median.
  • 53% of tracts below the mean
  • 2/3 of tracts below the mean, 14% have a vacancy rate more than 1 std dev above the mean. In those tracts, median vacancy rate was 12 percent.

Long-Term Vacant Housing in the United States Long-Term Vacant Housing in the United States Presentation Transcript

  • Long-Term Vacant Housing in the United States The analysis and conclusions set forth are those of the author and do not indicate concurrence by other members of the research staff or the Board of Governors. Raven Molloy Federal Reserve Board of Governors May 20, 2014
  •  Unintended vacancy reflects an imbalance between supply and demand in the housing market.  Some amount of vacancy is normal as residents change. And some houses are intended to be vacant for parts of the year.  Unintended vacancy reflects underutilization of the housing stock.  When structures stand vacant for a long time, there could be adverse consequences for house prices and neighborhood quality.  In aggregate, the vacancy rate rose sharply during the housing market contraction and has yet to return to pre-crisis levels. Introduction
  • Q1 89 101112131415 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 year Gross Vacancy Rate Aggregate Vacancy Rate Source. Housing Vacancy Survey.
  • Q1 3456789 10 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 year Vacancy Rate Excluding Seasonal and Occasionally Occupied Housing Aggregate Vacancy Rate Source. Housing Vacancy Survey.
  •  Goal of this project is to learn more about the vacant stock:  What fraction of the aggregate rise in vacancy reflects imbalances between supply and demand?  What types of locations have large imbalances between supply and demand?  Measure imbalances between supply and demand using units that have been vacant for a long time.  Short periods of vacancy could be due to normal turnover of residents.  Long periods of vacancy are more likely to be associated with adverse effects on the neighborhood. Introduction
  •  Aggregate statistics  “Long-term vacancy” = units that have been vacant for an unusually long period of time  What fraction of the rise in aggregate vacancy is due to long-term vacancy?  Neighborhood-level statistics  Distribution of long-term vacancy across neighborhoods.  Characteristics of neighborhoods with large shares of long-term vacant housing. Agenda
  •  American Housing Survey  Biennial panel dataset of housing units 1985 to 2011  Categorizes 6 reasons for vacancy:  For sale  For rent  Seasonal  Usual Residence Elsewhere (URE)  Rented/sold but awaiting occupancy  Other  Length of vacancy  Detailed property characteristics  Exclude seasonal, Usual-Residence-Elsewhere and rented/sold. Aggregate statistics
  • Length of Vacancy, 1985 to 2003 For Rent For Sale Other Percent of housing units vacant: Less than 1 month 35.7 13.3 8.8 1 to 2 months 13.3 6.8 4.4 2 to 6 months 26.7 27.9 16.5 6 to 12 months 8.8 16.9 10.9 1 to 2 years 5.6 12.1 13.4 2 years or more 7.4 14.1 42.7 Never occupied 2.6 8.9 3.2 Percent of all vacant housing units 22.8 8.7 16.3 Aggregate statistics  77% of units for sale vacant 12 months or less.  76% of units for rent vacant 6 months or less.  41% of “other” units vacant 12 months or less.
  • Reasons for “Other” Vacancy in the 2012 Housing Vacancy Survey Percent of Other Vacant Stock Personal/family reasons 19.7 Foreclosure 11.7 Legal proceedings 5.9 Possibly abandoned/to be demolished/condemned 6.7 Intended for year-round occupancy but vacant 6+ months 5.8 Being prepared to rent/sell 6.6 Needs repairs 13.9 Being repaired 9.3 Held for furniture storage 7.4 Held for Specific Use 1.0 Other/Don’t know 11.3
  • Presence of Negative Physical Characteristics by Length of Vacancy for “Other” Vacant Units, 2001-2011 At least 1 At least 3 At least 5 Fraction of housing units vacant: Less than 3 months 30.8 11.1 6.1 4 to 11 months 41.7 20.9 11.5 1 to 2 years 55.3 29.0 16.4 2 to 3 years 62.7 35.4 21.8 3 to 5 years 74.6 48.1 32.7 5 years or more 77.9 58.3 42.6 Aggregate statistics  Owners that intend to leave a property vacant are more likely to maintain it, so units left vacant unintentionally are more likely to be in a state of disrepair.  Presence of 19 physical characteristics associated with deterioration:  Cracks in floors, walls or ceilings  Broken windows  Holes in roof  Incomplete plumbing  No heating equipment
  • Long-term Vacant Units Over Time Aggregate statistics  Define long-term vacancy as:  Units for rent for more than 6 months  Units for sale for more than 1 year  Other vacant units that have been vacant for more than 2 years0 .005 .01 .015 .02 19851987198919911993199519971999200120032005200720092011 Other Vacant > 24 mo. For Sale > 12 mo. For Rent > 6 mo.
  • Aggregate statistics  Vacant stock rose from 12.9 million units in 2001 to 17.5 million units in 2011  Increase = 4.6 million units, of which:  Seasonal/occasionally occupied = 2.0 million units  Long-term vacant = 1.1 million units  For rent < 6 months = 0.7 million units  “Other” vacant < 2 years = 0.6 million units  For sale < 2 years = 0.2 million units
  • Geographic Distribution of Long-Term Vacancy  Long-term vacancy is not a large fraction of the housing stock and accounted for only ¼ of the rise in vacancy since 2001.  But implications for some neighborhoods could be substantial if the stock is concentrated in relatively few locations.  Neighborhood-level data from US Postal Service  Postal carriers report an address as vacant if mail has not been collected for at least 90 days.  For each Census tract, HUD reports total number of vacant residential addresses by length of vacancy  Tract = geographic area with population size between 1,200 and 8,000; “optimum” size of 4,000.  Define long-term vacancy as vacant 2+ years  Sample restrictions:  Exclude tracts with a large share of seasonal housing (2010 Census)  Exclude tracts with a number of housing units or a vacancy rate in 2010 that are not close to estimates in the 2010 Census.
  • Geographic Distribution of Long-Term Vacancy  Final USPS sample is 52,000 tracts = roughly ¾ of tracts and housing units in the US  In the USPS data, 4 percent of addresses in 2013 had been vacant for at least 2 years. This fraction is higher than the measure of long-term vacancy in the American Housing Survey (AHS) because:  Some vacant addresses may be seasonal  AHS excludes housing units that have fallen into a state of severe disrepair.
  • Geographic Distribution of Long-Term Vacancy  Most metropolitan areas have a stock of long-term vacant units that is roughly proportional to the stock of occupied housing units. Long-TermVacantAddresses(LogScale) Occupied Addresses (Log Scale) 10000 100000 1.0e+061.0e+06 5.0e+06 500 1000 5000 10000 25000 50000 100000 50000 100000 300000 Abilene, Akron, O Albany, Albany-S Albuquer Alexandr Allentow Altoona, Amarillo Ames, IA Anderson Anderson Ann Arbo Anniston Appleton Athens-C Atlanta- Auburn-O Augusta- Austin-R Bakersfi Baltimor Baton Ro Battle C Bay City Beaumont Billings Binghamt Birmingh Bismarck Blacksbu Blooming Blooming Boise Ci Boston-C Boulder, Bowling Bremerto Bridgepo Buffalo- Burlingt Canton-M Cape Gir Carson C Casper, Cedar Ra Champaig Charlest Charlest Charlott Chattano Cheyenne Chicago- Chico, C Cincinna Clarksvi Clevelan Clevelan College Colorado Columbia Columbia Columbus Columbus Columbus Corpus C Corvalli Cumberla Dallas-F Dalton, Danville Danville Davenpor Dayton, Decatur, Decatur, Denver-A Des Moin Detroit- Dothan,Dover, D Dubuque, Durham-C Eau Clai Elizabet Elkhart- Elmira, El Paso, Erie, PA Eugene-S Evansvil Fairbank Fargo, N Farmingt Fayettev Fayettev Flint, M Florence Florence Fond du Fort Smi Fort Way Fresno,Gadsden, Gainesvi Gainesvi Goldsbor Grand Fo Grand Ju Grand Ra Great Fa Greeley, Greensbo Greenvil Greenvil Gulfport Hagersto Hanford- Harrisbu Hartford Hattiesb Hickory- Hinesvil Holland- Honolulu Houma-Ba Houston- Huntingt Huntsvil Idaho Fa Indianap Iowa Cit Ithaca, Jackson, Jackson, Jackson, Jacksonv Janesvil Jefferso Johnson JohnstowJonesbor Joplin, KalamazoKankakee Kansas C Kennewic Killeen-Kingspor Knoxvill Kokomo, La Cross Lafayett Lafayett Lake Cha Lancaste Lansing- Laredo, Las Cruc Las Vega Lawrence Lawton,Lebanon, Lewiston Lewiston Lexingto Lima, OH Lincoln, Little R Logan, U LongviewLongview Los Ange Louisvil Lubbock, Lynchbur Macon, G Madison, Manchest Manhatta Mankato- Mansfiel Medford, Memphis, Merced, Midland, Milwauke Minneapo Missoula Mobile, Modesto, Monroe, Monroe, Montgome Morganto Morristo Muncie, Muskegon Nashvill New Have New Orle New York Ocala, F Odessa, Ogden-Cl Oklahoma Olympia, Omaha-Co Oshkosh- Owensbor Oxnard-T Parkersb Pascagou Pensacol Peoria, Philadel Pine Blu Pittsbur Pocatell Portland Poughkee Providen Provo-Or Pueblo, Racine, Raleigh- Rapid Ci Reading, Redding, Reno-Spa Richmond Roanoke, Rocheste RochesteRockford Rocky Mo Rome, GA Saginaw- St. Clou St. Jose St. Loui Salem, O SalisburSan Ange San Anto San Dieg San Fran San Jose Santa Ba Savannah Scranton Seattle- SheboygaSherman- Shrevepo Sioux Ci Sioux FaSouth Be Spartanb Spokane, Springfi Springfi Springfi SpringfiSteubenv Stockton Sumter, Syracuse Tallahas Terre Ha Texarkan Toledo, Topeka,Trenton- Tucson, Tulsa, O Tuscaloo Tyler, T Valdosta Vallejo- Vineland Virginia Visalia- Waco, TX Warner R Washingt Waterloo Wausau,Wheeling Wichita, Wichita Winston- Worceste Yakima, York-Han Youngsto Yuba Cit
  • Geographic Distribution of Long-Term Vacancy  Long-term vacancy varies much more by neighborhood. Long-TermVacantAddresses(LogScale) Occupied Addresses (Log Scale) 500 1000 2500 5000 10000 1 10 100 500 1000 2000
  • Geographic Distribution of Long-Term Vacancy  Long-term vacancy varies much more by neighborhood. Mean Mean + 1 Std. Dev. 0 .02.04.06.08 -.02 0 .02 .04 .06 .08 .1 .12 .14 .16 .18 .2 Long-Term Vacancy Rate in 2013
  • Geographic Distribution of Long-Term Vacancy  Distribution by metropolitan area is much more symmetric. Mean Mean + 1 Std. Dev. 0 .01.02.03.04.05 0 .01 .02 .03 .04 .05 .06 .07 .08 .09 .1 .11 .12 .13 .14 Long-Term Vacancy Rate in 2013
  • Characteristics of Tracts with High LT Vacancy  Characteristics of tracts can shed light on possible causes of long- term vacancy.  Merge USPS data with tract characteristics from 2008-2012 American Community Survey and the Census of 1990, 2000, and 2010.  Use principal component analysis to categorize tracts with a high long-term vacancy rate into groups with similar characteristics.  Analysis generates 4 groups.
  • Characteristics of Tracts with High LT Vacancy  “Poor Inner-City” tracts:  Close to metropolitan area center  High density  High % multifamily housing  Low % owner-occupied housing  Low median income; high unemployment and poverty rate; high fraction of residents without a high school degree  Net population decline 1990-2010  High vacancy rate in 1990
  • Characteristics of Tracts with High LT Vacancy  “Housing Boom” tracts:  Large % housing units built 2000-2009  High population growth 1990 to 2010  Far from metropolitan area center  Low density  High % owner-occupied housing
  • Characteristics of Tracts with High LT Vacancy  “Outlying” tracts:  Far from metropolitan area center  Large fraction of tracts in rural or micropolitan areas  Low density  % housing units built 2000-2009 not higher than average  Unemployment and poverty rates not that different from the typical tract
  • Characteristics of Tracts with High LT Vacancy  “Dense Suburban” tracts:  Average distance to metropolitan area center  Denser than the typical tract with less single-family and owner-occupied housing  Average population growth 1990-2010  Median income, poverty, and unemployment same as the typical tract, but a larger-than-normal fraction of college-educated residents  Vacancy rate in 1990 and 2000 not much higher than in the typical tract  Median house values and rents slightly higher than average.
  • Characteristics of Tracts with High Long-Term Vacancy  Four groups have very different characteristics, so there is probably not a single cause of long-term vacancy.  “Poor Inner-City”: characteristics of the population suggest that long- term vacancy is related to poor economic conditions.  “Housing boom”: vacancy may be partly due to over-building during the past 10 years.  “Dense suburban”: population characteristics not consistent with poverty or urban decline, and not much evidence of overbuilding— vacancy may be related to the severe economic recession.
  • Characteristics of Tracts with High Long-Term Vacancy  Exact groupings of tracts depend on tract characteristics included, method of analysis, cutoff used to define a high long-term vacancy rate.  In most cases, analysis identifies a “housing boom” group, an “inner- city” group, and at least one “suburban” group.
  • Where are Tracts with High Long-Term Vacancy? Note. Map excludes metropolitan areas with fewer than 10 Census tracts. High Long-Term Vacancy Tracts by Metropolitan Area
  • Where are Tracts with High Long-Term Vacancy? Note. Map excludes metropolitan areas fewer than 10 Census tracts. “Poor Inner-City” Tracts by Metropolitan Area
  • Where are Tracts with High Long-Term Vacancy? Note. Map excludes metropolitan areas with fewer than 10 Census tracts. “Housing Boom” Tracts by Metropolitan Area
  • Where are Tracts with High Long-Term Vacancy? Note. Map excludes metropolitan areas with fewer than 10 Census tracts. “Outlying” Tracts by Metropolitan Area
  • Where are Tracts with High Long-Term Vacancy? Note. Map excludes metropolitan areas with fewer than 10 Census tracts. “Dense Suburban” Tracts by Metropolitan Area
  •  Long-term vacancy is not a large fraction of the aggregate housing stock. Nor is it responsible for much of the increase in the aggregate vacancy rate since 2001.  But long-term vacancy is concentrated in a small number of neighborhoods with very high vacancy rates.  These neighborhoods are not concentrated in only a few types of metropolitan areas.  The characteristics of these neighborhoods not all the same.  Some are locations on the edges of MSAs with a lot of construction during the housing boom.  Others are inner-city locations with poor economic fundamentals—i.e. low income and high poverty/unemployment.  And others are in dense suburban areas. Summary
  •  In most neighborhoods, it is doubtful that a large stock of long-term vacant housing is holding back the recovery in prices or new construction.  But most metropolitan areas have at least a few neighborhoods with a high long-term vacancy rate.  Because the neighborhoods that have high long-term vacancy rates have diverse characteristics, the effectiveness of policies aimed at reducing the long-term vacant stock will depend on the type of neighborhood and metropolitan area being considered. Implications for today’s housing market
  • Thank You
  • Gross Vacancy Rates Over Time 68 101214 1950 1960 1970 1980 1990 2000 2010 year HVS AHS ACS Census
  • Year-Round Vacancy Rates Over Time 468 10 1950 1960 1970 1980 1990 2000 2010 year HVS AHS ACS Census
  • Characteristics of Tracts with High LT Vacancy Fraction of High Long-Term Vacancy Tracts Poor Inner City 35 Housing Boom 22 Outlying 20 Dense Suburban 18 Other 5