Obviously, I should have done this list before Halloween, but better late than never. This is based on CNBC‘s ranking of U.S. cities with decreasing real estate occupancy (and, presumably, declining populations).
Here are the Top 10 Emptiest U.S. Cities in 2012:
10. Toledo, OH: Rental vacancy rate: 11.5%. Homeowner vacancy rate: 3.8%.
9. Tampa, FL: Rental vacancy rate: 12.8%. Homeowner vacancy rate: 3.2%.
8. Houston, TX: Rental vacancy rate: 15.5%. Homeowner vacancy rate: 1.9%.
7. Atlanta, GA: Rental vacancy rate: 11.3%. Homeowner vacancy rate: 4.2%.
6. Las Vegas, NV: Rental vacancy rate: 11.9%. Homeowner vacancy rate: 3.9%.
5. Richmond, VA: Rental vacancy rate: 15.1%. Homeowner vacancy rate: 2.4%.
4. Detroit, MI: Rental vacancy rate: 16.9%. Homeowner vacancy rate: 1.7%.
3. Memphis, TN: Rental vacancy rate: 15%. Homeowner vacancy rate: 3.1%.
2. Dayton, OH: Rental vacancy rate: 11.3%. Homeowner vacancy rate: 5.4%.
1. Orlando, FL: Rental vacancy rate: 18.8%. Homeowner vacancy rate: 2.2%.
This list is based on 12-month occupancy data for the nation’s 70 largest metro areas. Since the ranking takes into account both rental and homeowner vacancies, we can infer a number of different dynamics affecting these markets. Surprisingly, considering the enormous real estate vacancy rates exhibited in some of these areas, economic vitality doesn’t always correlate to unrented apartments and unsold homes.
Take, for instance, Detroit, the troubled manufacturing hub that has been central in discussions of the United States’ economic recovery. While the state of Michigan as a whole ranked #2 on Wednesday’s list of States with Shrinking GDPs, its rental and homeowner vacancy rates are significantly lower than in cities like Orlando, Florida.
Since a community’s home ownership rates are typically associated with its overall economic strength, I found it surprising that single-family homes–the litmus test for a middle class presence–saw less vacancy in Michigan than in Orlando. Even Houston, Texas, whose role in the energy sector has kept its office and other real estate demand well above national levels, has seen higher homeowner vacancies than Detroit!
Naturally, this can be explained by the pre-recession overbuilding that occurred throughout states like Florida, Nevada, Arizona, etc. Detroit hasn’t seen a construction boom in some time, so its relative lack of inventory makes the numbers a little misleading.
This discussion raises a question for those private equity groups and REITs pursuing aggregate housing investments. Should Blackstone (NYSE: BX), Two Harbors (NYSE:TWO) and all the other firms buying up cheap, distressed homes focus on the overbuilt markets like Las Vegas? Or, should they focus on foreclosed homes in cities with weaker economies–cities whose decreased inventory may allow a greater increase in demand in the event of the market’s turnaround?
By Eric Hawthorn
Retrieved 26 November 2012 from http://llenrock.com/blog/top-10-ghost-towns-in-the-u-s/