A March LendingTree study found more than 16 million vacant housing units in the U.S. This figure may seem steep but becomes more reasonable when you consider how many homes sit empty while they're waiting to be rented or sold or their owners are staying in their primary residence.
While there are plenty of vacant homes in big cities, vacancy rates are often steeper in towns. With that in mind, LendingTree used U.S. Census Bureau 2020 American Community Survey data to analyze vacancy rates in the nation's 50 most expensive micropolitan areas - referred to in this study as "towns" - with populations between 10,000 and 50,000.
More than 320,000 homes across the nation's most expensive towns sit vacant. Of these homes, a bit more than two-thirds are empty because they're only used for seasonal, recreational or occasional use.
On the surface, it may be tempting to assume a high vacancy rate means there isn't a lot of demand for housing in a given area. And, as a result, home prices in that area would be lower than in an area with a lower vacancy rate. However, this isn't always the case. In fact, our study illustrates the opposite is often true.
Homes aren't necessarily vacant because they're unwanted. Instead, houses can be considered vacant because they're not in use. For example, a pricey vacation home sitting empty because its owner is at their primary residence would be considered vacant, as would a recently sold home that isn't quite move-in ready.
Because of this, an area's vacancy rate alone can't show the popularity of a given housing market or how expensive it's likely to be. Of course, that doesn't mean an area's vacancy rate isn't important or can't shed light on what's happening within a specific market.
High vacancy rates and high home prices can suggest that an area has a strong housing market but many people live elsewhere for most of the year. This is commonly the case in resort towns like Breckenridge, Colo. High vacancy rates and low home prices, on the other hand, could mean that a housing market is struggling and there isn't much demand for housing.
If vacancy rates are low and housing prices are high, it could signify that the market is very competitive and that there isn't enough housing supply to satisfy demand. If both vacancy rates and home prices are low, it could mean that demand is high but sellers are selling their homes for less than what they could have gotten.
Ultimately, understanding vacancy rates is important to understanding the overall housing market. But to appreciate what a vacancy rate means, you must look behind the facade at the reasons why homes are vacant.
With remote work becoming more normalized, many people may think about moving to a small town to save money or escape a hectic city lifestyle. While some towns are calmer and cheaper than cities, not all are. With that in mind, homebuyers should consider the following tips to be better prepared before buying a house in a small town:
The data used in this study comes from the U.S. Census Bureau 2020 American Community Survey (with five-year estimates). LendingTree used micropolitan-level data for areas with a population between 10,000 and 50,000 to approximate town-level data.
The survey measures the overall vacancy rate in an area by dividing the number of vacant households by the total number of households. Occupied households include homes owned or rented by occupants who use the home as their primary residence, while vacant households are broken down into seven subcategories. The U.S. Census Bureau defines the subcategories as follows:
This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.