Below is the data from Forbes.com (using US Census data) about 15 metropolitan areas with the worst home and rental unit vacancy rate.
- Cities in this ranking are generally categorized as follows; 1) Sunbelt cities with lack of development restriction; 2) Rustbelt cities with steady decline of populations. Major metropolitan area with little area to develop (= no excessive supply) are not listed in this ranking.
- Metropolitan area with excessive development (such as Las Vegas, Phoenix, Orlando, Jacksonville, Miami, Tampa and Bakersfield) are currently facing significant decline of economy and jobs. Therefore home and rental unit vacancy getting dangerously high. It will take a long time to reduce these excess inventories.
- While cities such as Atlanta, Charlotte, Indianapolis and Kansas City did not have real estate bubble, due to excessive supply in recent years, home and rental vacany is reaching very high point.
- Rustbelt cities such as Detroit and Dayon are facing the most challenging issues --- declining populations. For example, Detroit's populations has declined from 1.8 million in 1950's to 900,000 now. As economy in the market like Detroit could possibly get worse (think about BIG 3 trouble), devaluation of real estate in these market is likely to continue.
|Rank||Metropolitan Area||Home Vacancy||Rent Vacancy|
|1||Las Vegas/Paradise, Nev.||4.7%||16.0%|
|3||Atlanta/Sandy Springs/Marietta, Ga.||4.3%||16.1%|
|4||Greensboro/High Point, N.C.||4.7%||15.0%|
|8||Kansas City, Mo./Kansas City, Kan.||3.6%||15.2%|
|11||Miami/Ft. Lauderdale/Miami Beach, Fla.||3.6%||13.1%|
|13||Tampa/St. Petersburg/Clearwater, Fla.||3.0%||15.6%|
|15||Cincinnati, Ohio/Middletown, Ky.||4.3%||9.8%|
It is said that, unless real estate market hit the bottom, the US economy will not get better. I personally think that "bottom" of US real estate market will realize when vacany home rate decline from 2.9% to historical average 1.75% range. Since number of transactions are growing and housing starts are getting smaller, this will contribute to reducing excess inventory. But it certainly will take 1- 3 years to bring housing inventory to historial market level.
Lastly, in Austin Tx, my prime investment city, populations are growning at 2% annualy, home vacany hovers at 2% and developers have reduced housing starts. Real estate pros see, Austin will face porperty shortage sometime in 2010. That's great news for existing owners and new buyers.