Rental Vacancies peaked at 8.1% in Q3 1987. Homeowner Vacancies peaked at 1.9% in Q3 1989. There was a huge stock market crash in 1987 but the economy didn't slow dramatically until the 1990 to 1992 period when the housing market slowed nationally.
Fast forward to the present situation. Rental Vacancies peaked at 10.4% in Q1 2004. Homeowner Vacancies set a record high of 2.0% in Q4 2005.There are many reasons to fear an even greater economic slowdown starting in 2006 based on a more dramatic rise in home prices and extreme private and national debt levels.
Vacancy data can be found here.
From Q4 2004 to Q5 2004 the number of vacant homes increased by 427,000, with vacant for sale up 191,000 and seasonal vacancies up 245,000.
With speculation by property flippers, vacation home buyers, and retirement home buyers driving demand for new homes, it is not surprising that the nation produced far more homes than were needed for habitation in 2005. All this is leading to a supply glut that finally is impacting prices. Median prices for new home sales were down 8.39% from September to December
It isn't surprising that if you build a house where there is already overcapacity you might have a hard time selling it.
NAR estimated inventory of 2,796,000 existing homes for sale, or a 5.1-month supply in December, which is up by 582,000 (26.3%) year over year. Distressed borrowers will have a very hard time unloading their homes in a hurry if they decide they can no longer afford high mortgage payments.
February 18, 2006
Posted by blogger at 2/18/2006