Friday, August 21, 2009

Over Look At Vacant Houses

A record 1 in 9 U.S. homes are vacant, this is the highest number ever. In normal situation it should be about 1% ,but we are dealing with 11 times higher rate (11.11% vacant houses). One in every eight houses is in some sorts of foreclosure and inventory of homes in foreclosure increased to 4.3%, the most in three decades of data, and loans overdue by at least 90 days, the point at which foreclosure proceedings typically begin, rose to 7.97%, the highest on record.

Census numbers show:

More than 14 million housing units are vacant. That number does not include an estimated 4.8 million seasonal or vacation homes, most of which are occupied part of the year. The combined vacancy rate of almost 15% is higher than during previous recessions: 11% in 1991 and 9.4% in 1984.

About 3% of owned homes are vacant. In normal times, maybe 1% would be vacant.

More than 9% of homes built since 2000 are vacant compared with about 2% for older homes.

Homes priced at $500,000 or more are just as likely to be empty as homes that cost less than $100,000.

The numbers are further documentation of the gravity of the housing problem. This inventory is delaying any kind of housing recovery. The surge in empty houses, condominiums and apartments is creating a wave of problems for communities desperate to shore up property values and tax revenues that pay for services. Vacant homes create upkeep and safety problems that ripple through neighborhoods. It has a contagion effect. A house that is vacant is often a house that is less well kept up.

Historically, vacant housing was more of a concern in cities that have poor neighborhoods. Now, it has hit suburbs and new subdivisions.
The stimulus bill before Congress contains $2 billion to help communities buy and fix foreclosed, vacant properties, but it is not enough to stop the flood of vacant houses. A construction frenzy began pushing the vacancy rate up in 2005 but empty homes sold quickly at that time due to easy financing and greed. This is a different problem, it's high now because of lack of demand. There is no easy money and high unemployment has made the situation worse. Now, vacancies we see are from units that have been empty for a period of time. This is not good for already weak housing market. The thing that worries me the most is the increasing number of delinquencies(90+ days delinquent) in prime fix rate mortgages, this is very scary, it shows people with good credit are falling behind their mortgages due to weak job market and falling house prices. When homeowners are 10 to 15% under water it makes sense to continue to pay their mortgages as long as they have jobs, but when they are 30 or 50% under water there is no point to keep paying their mortgages, and this is what is happening.