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US Homeowner Vacancy Rate is 2.7%, Not 11%

Posted By Barry Ritholtz On February 1, 2011 @ 2:30 pm In Data Analysis,Mathematics,Real Estate | Comments Disabled

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 [1].”

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[1]

Source:  CNBC [1]

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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 [2]‘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 :

[3]

Source: Economagic [4]

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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 [5].

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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? [7] (April 16th, 2010)

URL to article: http://www.ritholtz.com/blog/2011/02/us-homeowner-vacancy-rate-is-2-7-not-11/

URLs in this post:

[1] Nearly 11 Percent of US Houses Empty: http://www.cnbc.com/id/41355854/Nearly_11_Percent_of_US_Houses_Empty

[2] Census Bureau: http://www.census.gov/hhes/www/housing/hvs/qtr410/files/q410press.pdf

[4] Economagic: http://www.economagic.com/em-cgi/charter.exe/cenhvs/table02c01+1990+2011+0+1+0+580+1090++0

[5] Table 1a. Quarterly Rental Vacancy Rates, Homeowner Vacancy Rates, Gross Vacancy Rates, and Homeownership Rates for Old and New Construction: http://www.census.gov/hhes/www/housing/hvs/qtr410/files/tab1a.xls

[7] Are Defaults Really Driving Retail Spending?: http://www.ritholtz.com/blog/2010/04/are-defaults-driving-retail-spending/