The number of vacant homes in the U.S. took a steep drop this summer, falling by 9% since the same time last year, reports Attom Data Solutions, but more than three-quarters of those remaining were investment properties. At the same time, the amount of empty dwellings that were bank-owned soared by 67% -- though that might actually be a healthy sign.
The share of vacant homes in America has been declining since the Great Recession, when it hit a peak more than 11% among rentals and about 3% for homeowner properties, according to the Census Bureau. Overall, it was at 1.6% in the third quarter of this year, says Attom Data Solutions, in its study of metropolitan areas with at least 100,000 residential properties. And that 1.6% represented a 3% reduction from the second quarter. All of which seems like more evidence to support complaints of low housing inventory from homebuyers and realty agents.
The current market also explains the skyrocketing number of vacant bank-owned residences, says Daren Blomquist, the property data provider's senior vice president. "A strong seller's market along with political pressure has likely motivated lenders to complete the foreclosure process over the past year on many vacant properties that were lingering in foreclosure limbo for years," he said in the report's news release. "While that has reduced the number of vacant properties in the foreclosure process — so-called zombie foreclosures — it has also resulted in a corresponding rise in the number of vacant bank-owned homes."
Nearly 1 in 7 bank-owned dwellings were vacant in Q3, according to Attom, while it was about 1 in 20 for those properties currently in foreclosure. In the investment sector, the share was less than either, at about 1 in 23 — but that's out of more than 24 million non-owner occupied properties. As of Q3, there were fewer than 47,000 bank-owned dwellings that were vacant.
Still, the more than a million investment properties that were left empty (1,035,813, to be exact) amounted to 2% fewer than in the previous quarter — the point at which, an Attom spokeswoman told IBD, the company started compiling data on those.
Attom's report found the highest vacancy rates for investment properties in some industrial Midwest cities. It probably comes as no surprise that Flint, Mich., now infamous for its water crisis, had the biggest proportion of vacant investments — at 24.3%. That was nearly twice that of long-suffering Detroit, where 12.6% of residential investment properties sat empty.
Not far behind, at 12.1% was Youngstown, Ohio, followed by two Indiana cities — South Bend with 11.5% and Indianapolis with 11%.
Weighed down by Flint and Detroit, Michigan topped the list of states with highest investment-property vacancy rates, at 10.3%. South Bend and Indianapolis helped land Indiana in second place, with 9.8%. Next were two southern states: Alabama, at 6.9%, and Mississippi, with 6.6%. Kansas was fifth, at 6.5%.
Among Attom's other findings:
- Regarding foreclosures, "18,304 U.S. residential properties actively in the foreclosure process were vacant (zombie foreclosures), representing 4.7% of all residential properties in foreclosure. The number of zombie foreclosures decreased 5% from the previous quarter and decreased 9% from Q3 2015."
- "States with the most vacant foreclosures (zombies) were New Jersey (3,698), New York (3,556), Florida (2,528), Illinois (1,018) and Ohio (999)," and the cities with the most were New York (3,590), Philadelphia (1,525), Chicago (783), Miami (694), and Tampa (603).
- Regarding bank-owned residences, "states with the most vacant REO properties as of the end of the third quarter were Florida (5,880), Michigan (4,661), Ohio (3,585), Illinois (2,652), and Georgia (2,626)." The top-10 cities with the most were Detroit (2,386), Chicago (2,379), Miami (1,880), Philadelphia (1,737), New York (1,668), Baltimore (1,649), Atlanta (1,573), Tampa (1,310), Cleveland (1,106) and Flint (1,091).
- The metropolitan areas with the highest vacancy rates overall were: Flint (7.1%), Youngstown (4.6%), Detroit (4.2%), Beaumont-Port Arthur, Texas (3.9%), Mobile, Ala. (3.7%), Port St. Lucie, Fla. (3.5%), Atlantic City-Hammonton, N.J. (3.5%), Montgomery, Ala. (3.4%), Toledo, Ohio (3.3%) and Birmingham-Hoover, Ala. (3.2%)
- The ZIP codes with more than 20% vacancy rates overall were Chicago's 46407 (29.3%), Flint's 48505 (28.6%), Hilton Head, S.C.'s 29928 (26.2%), Detroit's 48205 (22%) and Flint's 48504 (21.5%).
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