Glut: 1.8 million units of "excess housing" in U.S.
Calculated Risk, a math whiz of a blog, crunches the numbers today and reports there are 1.8 million units of "excess housing" in the United States today.
Just to be clear, CR is not talking about vacant units -- there are always a lot of vacant homes and apartments; the exercise is to calculate the gap between current, elevated level of vacancies and normal levels of vacancy. Here's the math:
If we add this up, 760 thousand excess rental units, 825 thousand excess vacant homes, and 200 thousand excess new home inventory, this gives about 1.8 million excess housing units in the U.S. that need to be absorbed over the next few years. ...
These excess units will keep pressure on housing starts and prices for some time.
I would encourage those still looking for a bottom in the housing market to re-read the previous sentence. Or, read this sentence from Calculated Risk's coverage of today's Case-Shiller report:
Prices are still falling, and will probably continue to fall for some time.
Or, you can read this from LA Biz Observed blogger Mark Lacter's take on the L.A. housing market, which he wrote for the Financial Times:
“This is going to be a slow burn,” says Christopher Thornberg, a principal at Beacon Economics. ... “Eventually, prices will hit bottom and when they hit bottom they’ll stay there for years."
-- Peter Viles
Thoughts? Comments? E-mail story tips to Peter Viles.
Photo credit: Getty Images
How is "excess" not "vacant"?
It sure sounded that way to me.
Nothing but a bunch of empty homes and condos that nobody wants at the prices the sellers are asking.
Posted by: E | October 28, 2008 at 02:56 PM
I have to put this in perspectve. I just verified 2007 census numbers. There are 215,090,485 people 21 and over in the United States. 1,800,000 doesn't look so big. ( 1.8 versus 215 )
Over 85% of homeowners are NOT a part of this foreclosure problem, either according to Peter's past posts.
Does anyone else see this as a perspective issue?
Posted by: anonymous | October 28, 2008 at 03:11 PM
“Eventually, prices will hit bottom and when they hit bottom they’ll stay there for years."
Really?? really?? Long enough for me to not have to slave away for a decade to put together a decent down payment?? I hope you're right, Christopher Thornberg. I dream about the day when I can afford to buy a cute little house for me and maybe a future dog.
Posted by: acidspit | October 28, 2008 at 03:33 PM
Suddenly a story story appears that doesn't have dung beetles all over it.
Posted by: CompaJD | October 28, 2008 at 08:04 PM
So, where is everyone living now?
Posted by: xtine | October 28, 2008 at 08:37 PM
My understanding of those numbers is that they're only looking at homes that are on the market (for rental or sale). There's no good estimate of how many homes are sitting empty but not on the market (no doubt waiting for the market to recover), so the glut may be even worse than these numbers belie.
Posted by: Jim | October 28, 2008 at 09:47 PM
It is ironic that there can still be so many homeless people during a time of so much "excess housing".
Posted by: John T Watts | October 29, 2008 at 04:19 AM
@ anonymous:
I have to add to your perspective
There may be 215 million people over 21 in the US, but people tend to live together (more than one adult per housing unit), so all of a sudden, it's 1.8 versus 107.5. When you consider that 1.67% of all housing units in the country are vacant you realize how little space there is for new housing. Sure some of that glut will be bought or rented out, but mostly at the sacrivice of leaving or selling another housing unit, leaving a net 0 change.
85% of homeowners may not be a part of the foreclosure problem, but who do you sell your house to when you need to move? It there is already so much unused housing laying around, why should anyone buy from these homeowners looking to move? THAT is why prices are going down, and that is why homeowners should care.
Posted by: Other Anonymous | October 29, 2008 at 06:35 AM
Forclosures tend to occur in the communities that have high percentage declines in prices. If you keep an eye on the trend in home prices you will have a good idea if and when a community will have increases in forclosures. One site to follow this is:
http://www.homepricetrend.com
Posted by: Suzi | October 29, 2008 at 11:07 AM
There were 3 million excess units in July.
http://econlog.econlib.org/archives/2008/07/
scary_housing_d.html
Have we whittled down 1.2MM units in 3 or 4 months?
Not too shabby.
Posted by: sandiegan | October 29, 2008 at 10:31 PM