The real estate industry is still struggling to figure out how to capitalize on a new trend in empty homes: the lack of renters.
“We’re not seeing a great number of people leaving, especially in places like Detroit, Chicago and San Francisco,” said Adam Green, a senior vice president at The Realtor Group, a real estate consulting firm.
“It’s more a reflection of a lack of demand in those cities.”
The problem is that empty homes aren’t a new phenomenon, Green said.
“This is the first time we’ve seen it, we haven’t seen this many empty homes in some years,” he said.
For example, he said, there are about 4 million empty homes on the market in New York City alone.
“The fact that we’re seeing it at this time is pretty remarkable,” Green said of the lack-of-residents phenomenon.
“People are being forced out of the city by the cost of living and it’s just a matter of time before we start seeing more empty homes.”
While this new phenomenon isn’t new, it’s been more apparent over the past several years, according to research from Realtors.com.
The site tracked the number of vacant homes for each metro area and identified them as those with no residents, a mix of nonresidents and renters.
In 2016, the number dropped to 633,000 empty homes.
Since then, however, that number has risen again, hitting 541,000 in 2019, according the report.
In San Francisco alone, the vacancy rate is 2.7 percent, up from 2.1 percent in 2016.
In Detroit, it is 7.3 percent, according Realters.com data.
The data suggests that the number is likely higher in places where demand is lower.
In New York, for example, the average vacancy rate in 2018 was 4.9 percent, compared with 3.5 percent in 2019.
In Seattle, it was 3.9, while it is 5.4 in San Francisco.
In Chicago, it averaged 5.7, while in San Diego it was 6.9.
“What we’ve been seeing is that the city is getting hit harder by its population crisis,” Green told Business Insider.
“You’ve seen a lot of empty homes being created, and they’re going to become more concentrated.”
But not every city has experienced a surge in vacant homes.
The number of empty apartments in Chicago, for instance, dropped from 1.5 million in 2020 to 619,000 last year.
“I think you’ve seen an increase in vacant housing, but that’s not necessarily a bad thing,” Green added.
“Just not enough for people to move into them.”
In other cities, the situation has gotten even worse.
“In Los Angeles, we had 8.5 times more empty apartments than vacant houses in 2020, and that number is expected to climb to 11 times in 2021,” said Dan Kiehne, a Realtings.com analyst.
“That is a lot.”
And even in places that have seen a surge, the numbers are only getting worse.
In 2018, the national vacancy rate was 7.2 percent, but it has climbed to 10.2 per cent this year.
In 2019, the rate is now 8.8 percent, and the number will climb to 13.3 per cent in 2021.
In Phoenix, it jumped from 647,000 to 1,070,000.
“If we’re talking about a vacancy rate of 15.5%, that is really quite a high number,” Kiehn said.