Now that recovery in the housing market is well under way, should we be worried about 19 million vacant housing units? Absolutely not says NAI Global Chief Economist Dr. Peter Linneman. Of the 19 million vacant units, 4 million are rental units, which is 1.6 million more than the norm. Another 5 million are seasonally vacant, beach houses, vacation homes, and are not relevant from a housing market supply-demand point of view. According to the government’s own statistics 8 million are abandoned. They’re in places like North Philadelphia, Newark, Katrina-land, and are not relevant to housing market supply-demand. The 2 million vacant that leaves is 625,000 above the norm. Only 260,000 are held by homebuilders, which is actually about 40,000 below the norm. The bulk of vacant homes, about 665,000 were once held by flippers, speculative investors who have now been foreclosed on. They are now held by lenders, but those units were always empty. The number is well above the norm. It will affect the housing market but it is not an enormous problem and they tend to be concentrated geographically.

The replay of Dr. Linneman's Global Economic Breifing is available at www.naiglobal.com

Link back: http://blogs.naiglobal.com/nai_global/2010/01/housing-market-rebound-is-well-under-way.html Jan. 15, 2010

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