Vacancy: America’s Other Housing Crisis

The image of America’s housing crisis is of pricey, increasingly unaffordable housing in superstar cities. And there is too little housing—a scarcity—in those places. But there is another, even more disturbing side to America’s housing crisis: vacancy, and in some cases hyper-vacancy, in the nation’s hard-pressed Rust Belt cities.

This other side of the housing crisis is the subject of a new report published by the Lincoln Institute of Land Policy. The report, written by Alan Mallach of the Center for Community Progress, examines the extent of housing vacancy across America’s cities, identifies its staggering economic and social costs, and outlines policies to address it. Mallach uses data from the U.S. Census and U.S. Postal Service to identify vacant properties.

While housing vacancy has long been a problem in America, especially in economically distressed places, vacancies surged in the wake of the economic crisis of 2008. The number of unoccupied homes jumped by 26 percent—from 9.5 to 12 million between 2005 and 2010. Many people (and many urbanists) see vacancy and abandoned housing as problems of distressed cities, but small towns and rural communities have vacancy rates that are roughly double that of metropolitan areas, according to the study.

The number of vacant units has declined over the course of the recovery, but there are still more today than there were before 2005. Housing units that are considered temporarily vacant—that are neither on the market, being held for future occupancy, or being used seasonally—have increased by more than 50 percent, from 3.7 million in 2005 to 5.8 million in 2016.

Total Nonseasonal Vacant Units in the United States, 2005–2016 (in Thousands)

Mallach’s study tracks vacancy rates in 10 large legacy cities, including Detroit and Cleveland; five small legacy cities, including Flint and Gary, Indiana; five Sunbelt cities, among them Atlanta and Dallas; and five magnet cities, including San Francisco, Boston, and Washington, D.C.

A healthy rental vacancy rate typically hovers around 7 to 8 percent, and a healthy homeowner vacancy rate is pegged much lower, at 2 percent or below. A vacancy rate of above 12 percent is considered high, and above 20 percent is considered hyper-vacancy.

Vacancy is a much bigger problem in legacy cities than it is in magnet or Sunbelt cities. The vacancy rate was roughly 17 percent in small legacy cities and 15 percent in large legacy cities in 2010, compared to 11 percent in Sunbelt cities and just 7 percent in magnet cities.

Furthermore, vacancy rates increased by more than 80 percent in small legacy cities and nearly 60 percent in large legacy cities between 1990 and 2010, compared to just 3 percent in Sunbelt cities and a negative rate of 5 percent in magnet cities.

Change in Vacancy Rate by City Cluster, 1990–2010

From 1990 to 2010, the median vacancy rate of census tracts increased from roughly 6 percent to more than 20 percent in Flint; from 12 percent to more than 20 percent in Gary; and from 10 percent to more 20 percent in Cleveland. Worse, the number of neighborhoods (or census tracts) with hyper-vacancy increased from 2.5 percent to more than 50 percent in Flint; from 16 percent to more than 50 percent in Gary; and from 6 percent to 50 percent in Cleveland.

Nonseasonal Vacancy by Tract in Chicago and Detroit, 2010

In some cities, such as Chicago, hyper-vacancy is concentrated in distinct neighborhoods. In Baltimore, vacancy has spread outward from the city center from 1990 to 2010.  In Detroit, hyper-vacancy is spread throughout the city.

High rates of vacancy and hyper-vacancy have traumatic impacts on neighborhoods and cities. Vacant homes reduce the value of neighboring properties and of entire neighborhoods, as the graph below on Youngstown, Ohio shows. They are breeding grounds for drug abuse, crime and violence. Blocks with vacant properties face crime rates twice as high as blocks without them, the study notes.

Vacancy imposes significant costs on local government for additional policing, demolishing buildings, and maintaining lots. Demolishing a single home can cost over $20,000 in some cities, and the government often doesn’t have a plan for what to do with the property afterwards. Not to mention the foregone revenues of properties that are taken off the tax rolls.

Relationship Between 2010 Vacancy Rate and 2014 Median Sales Price in Youngstown, Ohio

Neighborhoods with high vacancy rates rarely recover, according to the study. Vacancy is “first and foremost a symptom of other problems — concentrated poverty, economic decline, and market failure,” the study notes. That means the solutions must go beyond just tearing abandoned buildings down. The study urges local governments to use tools like “spot blight” eminent domain, vacant property receivership, and land-banking to speed up the transition from owner to owner.

To prevent vacancy from happening in the first place, cities should also look to prevent foreclosures, such as through home-repair programs or property tax “circuit-breakers,” which cap taxes for low-income home buyers. Low-cost or subsided mortgage financing can be made available to prospective buyers of vacant units to alleviate barriers to homeownership. Vacant lots can and should be turned into parks or community gardens.

Ultimately, dealing with vacancy requires a holistic approach to addressing urban crime and dislocation, creating safer neighborhoods, investing in local schools and other community assets, creating better jobs and pathways to work, and addressing the root causes of concentrated poverty. When all is said and done, America’s other housing crisis is a product of its lopsided winner-take-all urbanism, in which small pockets of concentrated wealth in superstar and magnet cities stand juxtaposed with concentrated disadvantage, especially in older industrial centers.