I don’t know what to make of this bizarre headline from Diana Olick, who made the claim that “Nearly 11 Percent of US Houses Empty.”

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Source:  CNBC

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That 11% number is about 4X of what is should be, according to the data wizards at Census, and Economagic, who note that the rate was 2.7% in Q4.  (Maybe someone added 4 of these up to make a full year!)

Census Bureau‘s last news release was:

“National vacancy rates in the fourth quarter 2010 were 9.4% for rental housing and 2.7% for homeowner housing, the Department of Commerce’s Census Bureau announced. The rental vacancy rate of 9.4% was 1.3% lower than the rate recorded in the fourth quarter 2009 and 0.9% lower than last quarter. The homeowner vacancy rate of 2.7% percent was approximately the same as the fourth quarter 2009 rate, and 0.2 percentage points higher than the rate last quarter (2.5 percent).”

Here is the Economagic chart showing the US Homeowner Vacancy Rate :

Source: Economagic

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I cannot figure out how she got to 11% from 9.4% apartment vacancy and 2.7% home vacancy.

If you want to play with the data yourselves, here is a Census Department spreadsheet: Table 1a. Quarterly Rental Vacancy Rates, Homeowner Vacancy Rates, Gross Vacancy Rates, and Homeownership Rates for Old and New Construction.

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UPDATE February 1, 2011, 3:39pm

The best explanation I have seen is that the 11% number is technically correct, but irrelevant. It is not the Vacancy Rate, but simply the total number of structures that are unoccupied. One reader wrote:

Table 3. 14.2 million houses vacant year-round divided by 130.2 million housing units = 10.9%.

The harder question is why that’s the number she’d report. Who cares how many old abandoned farm houses there are?

The answer is that the 11% is a sensationalistic number, one that is meaningless to those following housing.

UPDATE 2 February 1, 2011, 7:39pm

The readers who sent this question in may have been confused by the Page header, which reads:  “Home Ownership Nearly 11% of US Houses Vacant

I could see how that might be confusing as to Home Ownership Vacancy Rates to some readers.

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Previously:
Are Defaults Really Driving Retail Spending? (April 16th, 2010)

Category: Data Analysis, Mathematics, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

21 Responses to “US Homeowner Vacancy Rate is 2.7%, Not 11%”

  1. postman says:

    Given the level of contemporary innumeracy, she may well have multiplied 2.7% by 4. Perhaps she added the rental and housing rates together (improperly rounding first) to get 9 + 2=11.

  2. GB says:

    Her calcs are in the middle of the article. Barry can you pick them apart?

  3. browndlee says:

    I have saw numbers like this used before and I think they refer to second/third homes owned by people. I guess in theory if you own more that one then the others are vacant. I think the logic is now that home prices are falling owners will be quick to dump them. Not sure I buy that but I guess they could be extra supply at the margin.

  4. PT Love says:

    Looks like the math is correct after all. Check out Table 3 in the Census press release BR links to above. Under “Fourth Quarter 2010″, it shows 14,100,000 units vacant year-round out of 130,845,000 total units, or 10.8%. Quoting from the same report:

    “Vacant year-round units comprised 10.8 percent of total housing units, while 3.3 percent were for seasonal use. Approximately 3.0 percent of the total units were for rent, 1.6 percent were for sale only, and 0.6 percent were rented or sold but not yet occupied. Vacant units that were held off market comprised 5.5 percent of the total housing stock. Of these units, 1.8 percent were for occasional use, 1.0 percent were temporarily occupied by persons with usual residence elsewhere (URE), and 2.8 percent were vacant for a variety of other reasons.”

    If you check out the end of the report, you’ll see that the “homeowner vacancy rate” formula only includes units currently listed as for sale in the numerator. So vacant units not listed for sale aren’t included in the reported 2.7% vacancy rate. Looks like Ms. Olick is correct after all (though there’s no context provided for what a typical % of empty homes might be).

  5. michaelb says:

    The math is correct but the unoccupied housing includes second homes, vacation properties, seasonal rental and other housing not intended for permanent use. Hard to derive anything meaningful from those numbers.

  6. KT9 says:

    The link to the press release is here (Press Release): http://www.census.gov/hhes/www/housing/hvs/qtr410/q410ind.html

    It’s as PT says.

  7. Here is page 2 from the same report:

    For rental housing by area, the fourth quarter 2010 vacancy rates inside principal cities (9.8 percent), in the suburbs (9.1 percent), and outside Metropolitan Statistical Areas (MSA’s) (9.1 percent), were not statistically different from each other. The rental vacancy rates in principal cities, in the suburbs, and outside MSA’s were lower than their corresponding fourth quarter 2009 rates. The homeowner vacancy rate in principal cities (3.6 percent) was higher than in the suburbs and outside MSA’s (2.3 percent each).

    I don’t get what the “Vacant year-round units” are, how that fits into 2nd and 3rd homes, vacation properties, etc.

    Vacant to me does not mean a beach house unoccupied in the winter, or a Ski house in July.

    Color me perplexed . . .

  8. Justin says:

    You are reading her idiotic headline into the Vacancy rate — she said they are empty — hey , you are at work, your house is empty, right?

    She is on TV and therefore not very good at math.

  9. DC says:

    It’s probably the fault of a math-challenged headline writer who followed the Postman’s logic. “These kids today” can’t add, just as they don’t know the difference in the words “than” and “then.”

    Haste makes waste. Speed kills. Nothing surprises me anymore and if there’s a lesson it’s that no single source of information is to be taken as gospel, especially when there’s money involved.

  10. Petey Wheatstraw says:

    “US Homeowner Vacancy Rate”

    What does this even mean? Do we have vacant homeowners, or are they just vacuous? Maybe they’re catatonic or comatose? Maybe they’re zombies!

    Most likely they’re the walkin’ dead.

  11. Julia Chestnut says:

    That’s not even the worst part of this article: you’ll notice that she says that prices have fallen and affordability is “much improved.” Uh, no. First, prices have fallen most where affordability was insanely out of line with prices, and/or places where affordability is unchanged because the income level of the local population has tanked along with prices (the State of Michigan comes to mind).

    In other places, prices have declined a tiny bit, only to resume growth while wages and income are largely stagnant — the D.C. area comes to mind.

    So I would say that the entire premise of her position taken in this article is garbage.

    Considering that there has been fairly massive inflation in education, insurance, and energy costs during the past several years, while income has remained stagnant, it seems pretty clear to me that the prices of houses are still pretty far out of line with what people see as affordable. If you have a large inventory of something that people are not buying, and you have done everything you can up to throwing in a free pony with purchase, prices need to go lower. Period.

  12. nancefinance says:

    Even if you can figure out how the number was derived the real point is that the headline datapoint just doesn’t pass the smell test. The headline is designed to make us feel that one in ten people are homeless. If that were the case we would have an even bigger economic disaster on our hands than we already do. For the past three years, we’ve seen scores of stories about emptied out neighborhoods — in Detroit, Cleveland, Las Vegas; Florida and California. And that’s really bad. But a one-in-ten statistic implies that most people in most states know families that are homeless or live in neighborhoods with empty houses. And that’s not how things are.

  13. anonymouse says:

    “Housing Unit” definition: A housing unit is any house, townhouse, apartment, mobile home or trailer, single room, group of rooms, or other location that is occupied as a separate living quarters, or if vacant, intended for occupancy as a separate living quarters. A housing unit can exist within, over, or under a structure that appears to be nonresidential or commercial. Housing units must:

    • Be separate living quarters, meaning occupants live separately from any other occupants in the building, and

    • Have direct access, meaning that the entrance to the living quarters must be directly from the outside of the building or through a common hall.

    http://2010.census.gov/partners/pdf/langfiles/qrb_English.pdf

    “Abandoned farmhouses” aren’t counted as housing units. The non-response to the mailed survey expected of an abandoned farmhouse will trigger an enumerator visit, confirming it’s an abandoned farmhouse and the address will be deleted as a housing unit. The old house won’t be counted as vacant, it won’t be counted as anything.

    Housing units can be almost anything. The apartment over your garage where your mother-in-law used to live but’s now only storage. A single house rented to three different tenants – basement, ground level and upstairs – can count as 3 “housing units”.

    I believe the occupancy status is as of “Census Day” only – April 1. Although they toss in “year-round” which makes little sense because they seem to be going out of the way to ask for the housing unit status on only April 1.

  14. you know, there are Homeless about..

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Growing+Homelessness+in+America

    one might think that w/ all the “Taxpayer”-financed Bailouts of the TBTF, FNM, FRE, et al., it may not be so high a # ..

    ‘empty buildings’ do so well on their own, and all that..

  15. gordo365 says:

    Do the math. 14 Trillion debt. 14 Million empty houses. You think that is a freaking coincidence? Oh Con traire mon friare.

    The secret Builderberg society has been diverting federal funding to build $100,00o empty houses ever since Ronald Regan was admitted to this secretive group.

    Don’t you see. They control everything – not Wall Street.

    Oh man — I think they can see me typing this. Got to go…

  16. wngoju says:

    thank you PT! I wondered what the “vacancy rate” BR was so hot for was.

  17. philipat says:

    Disingenuous use of data at best. Actually, I’m surprised because Diana has been, IMHO, one of the better CNBC reporters over the years. Perhaps she has been given a message?

  18. PT Love says:

    OK, found the proper context. Turns out there’s all kinds of data on the Census website! Including a spreadsheet summarizing all of the historical vacancy data:

    http://www.census.gov/hhes/www/housing/hvs/historic/files/histtab8.xls

    So we’ve established the 10.8% empty rate is bona fide. Sounds bad, right? And in fact, it’s certainly elevated (surprise, surprise): as far back as I looked, the highest rate was 10.9% in 2009. But over the past 15 years, which I’d say included some pretty strong housing markets, the absolute lowest rate was…8.5% in 2000.

    In other words, despite the scary-sounding “more than one in ten houses is EMPTY!!!1!!”, the vast majority of those homes would be classified as “vacant” even in the best of times, and filling up (or eliminating) 2-3% of the housing stock would bring things back to normal. Not a great situation to be in, but not quite the ghost town dystopia the original writer seems to be portraying….

  19. The last I heard George Foreman had 12 houses. Does that make his personal vacancy rate 91%?

    Maybe that 11% number just means more super wealthy are buying more homes

  20. Ideator says:

    For whatever it’s worth, heres what the latest issue of the St. Louis Fed’s Regional Economist says about the vacancy rate:

    According to the Census Bureau, the total number of housing units increased to 130.68 million in the third quarter of the year. … . Of the total housing stock, roughly 18.77 million units—or 14.4 percent of the total—were vacant in the third quarter of 2010. These levels are down from the second quarter of the year, although relatively elevated compared with the vacancy rate of less than 13 percent in 2005. Naturally, the increase in foreclosures has contributed to the high percentage of vacant homes.

    (The Regional Economist, January 2011, Have the Trends in Housing Bottomed Out?, By Bryan J. Noeth and Rajdeep Sengupta, http://www.stlouisfed.org/publications/re/articles/?id=2065)

  21. [...] Diana Olick’s technically accurate but misleading post about the Housing Unoccupied Rate. (US Homeowner Vacancy Rate is 2.7%, Not 11%). I may revisit that next week in greater [...]