Glut: 2.3 million vacant houses for sale in U.S.A.

Breaking news from the Census Bureau: The number of vacant homes for sale in the United States inched up to 2.3 million in the first quarter, the highest level ever measured, and an ominous sign for home-sellers and home builders.

From Reuters: "The share of vacant U.S. homes rose to a record level in the first quarter, the government reported on Monday, with homeowners finding it increasingly difficult to find buyers in a collapsed market and more homes in foreclosure."

From the AP: "Global Insight economist Patrick Newport called the report 'worrisome.'  'The inventory problem has not gotten any better,' Newport said. Although glut-fighting home builders have reined in construction, 'They still will have to cut back more.'"

The number of vacant, for-sale homes has been rising steadily for five years, climbing from 1.2 million in the first quarter of 2003 to 2.3 million in the first quarter of this year. The percentage of homes that are vacant and for sale has also been rising, from a recent low of 1.5% in 2001, to 2.9% in the first quarter. Those percentages do not include homes for rent.

Federal Reserve Chairman Ben Bernanke has warned that the current surge in foreclosures threatens to add more inventory to an already crowded market. In a speech in March, he said, "At the national level, the rise in expected foreclosures could add significantly to the inventory of vacant unsold homes--already at more than 2 million units at the end of 2007--putting further pressure on house prices and housing construction."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo: New houses scheduled to be auctioned in Gardena.

Comments

[Steve]

This is great news I own three rentals and jsut adds for upward pressue on rents, thanks Bush.

[Cal]

And the rise came mainly from the Western region:

Homeowner Vacancy Rates (Western Region) Q1 2007: 2.6

Homeowner Vacancy Rates (Western Region) Q1 2008: 3.2

Only one other region (Northeast) showed an increase - .1%

Renatal Vacancy rate out west also increased from 6.5 to 7.0 YoY. 2 of the 4 regions rental vacancy rate declined.

I think homeowners renting out their homes in the hope things get better are going to be in for a rude shock. Good news for renters.. private rentals prices will be going down. But I think corporate rents will be going up for a bit longer as foreclosed homeowners get converted to renters and have to go with the people with less stringent qualifying criteria.

http://www.census.gov/hhes/www/housing/
hvs/qtr108/q108press.pdf

[mike]

THIS PROBLEM DOES NOT AFFECT LOS ANGELES PERIOD

[RichW]

"THIS PROBLEM DOES NOT AFFECT LOS ANGELES PERIOD"

If that is true, then why is inventory up and prices down in (most of) L.A. ? Been hitting the pipe a little too often I see...

[Freddy Froch]

This can't be true. After all, "last time I checked, they aren't making any more land!!!"

[Look, Ma, I'm published]

Mike:

I've seen you post this a time or two recently, and I'm pretty I haven't seen your explanation as to why Los Angeles will not be affected.

Could you explain your reasoning?

Sorry if you're repeating yourself in explaining it for us.

Or are you just flaming the board, looking to get reactions?

[Uncle Billy]

Well? With the banks sitting on thousands upon thousands of foreclosures, and certainly not "dumping" them at cut-rate prices currently, which companies are poised to take them off the banks' hands? You know, the kind of companies that are going to be buying thousands upon thousands of homes for pennies on the dollar?

Or will it just be handed off to brokers like Catalist? Or will we end up with huge corporate landlords that will be renting out all these units -- Pottervillification? Inquiring minds want to know. There are just far too many homes to continue to one-off them through foreclosure agents or ersatz auctions. Almost seems like the next logical move, doesn't it? Where are our heroes who will open the spigot relieve all pressure from this pent-up inventory? Potter? Where are you?

(Potter can't come to the phone right now, he's busy at the Milken conference)

[anon1137]

Behind every one of those vacant houses there's a banker who knows the Fed would never let them fail.

[mike]

you saw the blog. suburban is out, fuel is now a luxury(similar to if you had no fuel at all) urban city centers will be where it,s at and all the fuel will be used for resources to take goods to the city centers. besides people will always hate humidity and cold!!!

i went through beverly hills. no for sale signs, you saw the recent blog by zip code.no trouble in the good areas, slightly more trouble in the bad areas, tanked in the outer limits. we burned up the resources, people will need to revert to an urban lifestyle.

[I live in L.A., too]

Mike,

Most of Los Angeles is more suburban than urban, and even in Los Angeles, the median price of an existing home or condo was down 14.3% YOY in March. That's the biggest decline for the city of L.A. yet in this down cycle, and it could accelerate further.

Using the median income-to-median price ratio, areas like Beverly Hills (4:1) and 90025 (6:1) probably shouldn't decline much. However, in SFV, that ratio is more like 11-13:1, depending on the ZIP code. And in Manhattan Beach, it's 11:1. So, it's likely this decline will even hit the "good" areas, although perhaps not all of them.

[IToldu2CashOut]

i wonder if Mike owns a loft downtown? If so at least he is backing it up. I think his thinking is somewhat on target, but I wonder if things will play out that way. Too many wildcards out there to predict for certain, but my feeling is that central LA will just take longer to drop. There is just a lot more denial in central LA than other places.

[Anon1]

"I went through beverly hills. no for sale signs"

For the record moron, there are currently 84 homes for sale in BH and that does NOT include BHPO, Bev Center or BH Adj.

[mike]

i don't own a loft downtown, but i do have real estate in l.a. city limits. you keep talking about prices dropping and i am talking about forclosure which is what the blog post was about. i never once said prices were not going to depreciate. i said forclosure was not going to happen in bulk quantities. but you guys keep questioning price depriciation and i am talking about forclosure.

[the problemwithcaring]

i don't own a loft downtown, but i do have real estate in l.a. city limits.
Posted by: mike

Hey, nonsensical mike is back!!!!!!!!!!!!!!!!!!

lol

Every close on that mythical house in the SFV that had a fantastical 90 day escrow?? I am just a) curious and b) pretending you live in reality. Forgive if that's an overreach....

[E]

If 90210 is so impervious to any correction, why do I see so many pre-foreclosures and tax liens on Foreclosure.com?

Don't those BH people pay their taxes?

[keith]

Wow, so Mike forecasts no wholesale foreclosures in L.A., that's really putting your internet rep on the line, podner.

Just to keep score, what foreclosure rate defines the over / under on that?

[keith]

From RealtyTrac -

IRVINE, Calif. – March 28, 2008 – The Los Angeles metro area, comprising Los Angeles County, reported 9,658 properties with foreclosure filings in February, an 18 percent decrease from the previous month, but still a 144 percent increase from February 2007, according to the latest RealtyTrac® U.S. Foreclosure Market Report. The Los Angeles metro area had the highest foreclosure rate among the five of the nation’s largest metropolitan areas, with one in every 346 households receiving a foreclosure filing — 1.6 times the national average. The metro area’s foreclosure rate was higher than foreclosure rates in New York, Philadelphia, Chicago and Dallas. --

Dang, Mike, how does that work into your discourse?

[Hold out in LA]

Anyone notice that they did not finish painting the red curbs on the right side of the street?
How much would you pay for a house where you can't invite anyone to a birthday party because there is no on street parking? Nevermind the price of gas, if they keep allowing these PUD's you won't have anyplace you can go to.