Are Rising Home Vacancies a Hidden Part of the Inventory Crisis?

July 25, 2019

Most of the conversation over the housing crisis has centered on a shortage of homes for sale. But housing analysts and a new report from the National League of Cities are raising the issue that vacant and abandoned homes nationwide remain part of that housing crisis.

In some smaller cities and rural areas, vacancy rates have pushed upwards to 20% of the housing stock.

“Abandoned homes can sit for years and become a real drain on the local government,” Kim Hart, managing editor at Axios, told CNBC.

Vacancy rates remain high in several midsize cities in the Midwest and upper Northeast, Hart says. “Many of these cities were once manufacturing hubs and mills that employed a large number of people … but the populations have shifted,” she says. Now, these cities are left with hundreds—even thousands—of vacant homes that are pulling down nearby property values and even posing safety concerns.

Cities hit hardest by housing vacancies are Detroit; Cleveland; Baltimore; Philadelphia; Gary, Ind.; Youngstown, Ohio; Macon, Ga.; and Flint, Mich., Hart says. Gary has the highest vacancy rate of homes in the country. In Gary, one-third of homes are unoccupied or abandoned, and it has 7,000 vacant buildings.

Cities are exploring how best to tackle the blight. For example, in Gary, lawmakers plan to demolish many of the abandoned homes to clear the lots and make them more attractive to developers to add affordable housing.

But demolition of a deteriorated home isn’t always the most feasible path financially. Hart says it costs about $10,000 to demolish a single-family home—calling that estimate on the conservative side. Therefore, Gary’s 7,000 abandoned properties could cost $70 million to demolish, in a city already cash-strapped.

Some cities are exploring other ideas. Cities such as Baltimore are taking possession of an abandoned or near-abandoned property and work with nonprofits to rehabilitate the homes for first-time buyers.

A new report from the National League of Cities has called abandoned housing one of the “greatest challenges for cities.” But it’s too often overlooked as a way to boost economic growth, the report notes. When vacancies are higher than 20% of a community’s total properties, the number of vacant buildings may grow indefinitely and the market stops functioning, according to the report.

Source: 
Vacancies Remain at ‘Epidemic Levels’ in Some U.S. Cities,” CNBC (July 19, 2019) and “Homeward Bound: The Road to Affordable Housing,” National League of Cities (2019)