There are promising real estate trends regarding the demand for homes and their affordability for 2023. Yet it still does not seem like the best time for potential homeowners to enter the market.
Prospective home buyers who are frustrated by the continued high prices of available homes won’t be happy to hear that 16 million homes in the U.S. are considered vacant . And these homes are located in major (and desirable) U.S. cities.Table of Contents
However, just because a home is vacant doesn’t necessarily mean it’s for sale. Some vacant homes are vacation homes, while others are uninhabitable.
To find out why so many homes are vacant — and where these vacant homes are — Today’s Homeowner compared data from 179 of America’s largest cities. We looked at the number of vacant homes compared to the total number of homes and how these metrics compared to median income and home values. Check out our findings below.
key findings
- Approximately 9% of homes in the US (16 million) are considered vacant.
- The top 10 U.S. cities with the highest vacancy rates are in the South or Midwest.
- Nearly one-third (32.8%) of vacant homes are vacation homes for seasonal or recreational use.
- Cities with the highest percentage of vacant houses occupied as vacation homes include Scottsdale, Arizona as well as Miami Beach and Pompano Beach, Florida.
What is an ’empty house’?
The U.S. Census Bureau has a broad definition of a “vacant home.” For our survey, we consider a home to be vacant if it has any of the following characteristics:
- No one lived there at the time of the census interview, except those who lived there had been gone for less than six months.
- It is used as a second home or “holiday home”.
- This is a rental house that may or may not have tenants.
- This is a livable home that is being prepared for sale.
- It was sold to new owners, but no one lives there now.
- Migrant workers live there temporarily.
The Census Bureau has a separate category of “other” vacant homes. These include homes that are under foreclosure, are being used for storage, need maintenance, or are abandoned. A breakdown of vacant homes in the US is shown below.
Cities with the most vacant homes
The most notable trends came from cities with the highest housing vacancy rates, primarily in the South and Midwest.
In Florida, Miami Beach (No. 1) and Pompano Beach (No. 4) have many vacant homes, but most of them are vacation homes. (We’ll discuss this more in the next section.) This was not the case for cities like Asheville, North Carolina, (No. 2) and Detroit, Michigan (No. 3), where vacation home rates are below 6%.
Why does Asheville have such a high vacancy rate? Nearly 16% of the city’s vacant homes are for sale. This makes Asheville the city with the highest percentage of vacant homes waiting to be sold. The next highest city – Harlingen, Texas – is far behind with 2.5% of vacant homes for sale.
When we asked real estate experts about Asheville’s high vacancy rate, most attributed it to the mismatch between available properties and buyer preferences, as well as local economic factors.
“[Asheville’s] local economy is in a recession,” said Troy Shaffer, founder of Blue Corporate Housing, a national short-term housing rental company. “This has caused a decrease in the resident population, and people are moving to more affluent states. Supply stays the same, while demand falls, causing vacancy rates to increase.”
“Market conditions are not positive for buyers or sellers. Home prices in Asheville are up 23%,” said Jason Edwards, a real estate agent and chairman of the Agent Advice editorial board. “Buyers are waiting for prices to drop before making this type of investment.”
However, the third-highest city in terms of vacancy rate — Detroit, Michigan — doesn’t have many vacant vacation homes (1.2%) or for sale (1.5%). Instead, most of the city’s vacant homes (17%) are vacant for other reasons.
“[This] could be due to a combination of factors such as a large number of foreclosures, homes in a dilapidated state making them uninhabitable, or abandoned properties awaiting demolition or condemnation,” said Realtor Eric Bramlett of Bramlett Residential .
With a median income of $36,140, Detroit has the third-lowest median income of the 179 cities included in our study. However, the median value of homes in the city is also $105,900, which likely explains the city’s homeownership rate of 51.28%.
“Despite the lower median income, Detroit’s relatively average homeownership rate may be due to more affordable housing options or the increasing prevalence of multi-generational households,” Bramlett told Today’s Homeowner.
Schaefer acknowledged that Detroit’s “volatile” market conditions could be contributing to the city’s high vacancy rate.
“This is largely due to the decline in the automotive industry, which has been the backbone of Detroit’s economy for many years,” Schaefer said. “The loss of jobs in the automotive sector has led to a significant decrease in population, leaving many homes vacant and deserted.”
Why are vacation homes having higher vacancy rates?
Nearly one-third (32.8%) of all vacant homes in the U.S. are seasonal or recreational vacation homes built for people who don’t want to move permanently . Not surprisingly, popular vacation destinations in Arizona and Florida have the highest percentage of vacation homes. In fact, the top 12 cities with the most vacant homes were located in these two sunny states.
Additionally, more than half of the vacant homes are vacation homes in eight cities, as shown below. The top cities contributing to vacant homes are Scottsdale, Arizona, and Miami Beach, Florida.
Are vacation homes keeping others away from home ownership?
Housing data shows that vacation homes are driving up average home prices in cities where residents’ incomes are not commensurate with their incomes.
In short, wealthy outsiders buying vacation homes may deter locals from buying their first homes.
In the top five cities with vacant vacation homes, the median home price was higher than the U.S. average of $261,400. However, only one of these cities — Scottsdale, Arizona — has a median household income higher than the national average of $70,784.
Joey Auman , a real estate agent and founder of Luxury So Cal Realty, said the high rate of get-away homes in South Florida cities such as Miami Beach and Pompano Beach is “raising home costs and making it more difficult for local residents to purchase a home.”
“Touring homes can certainly be a profitable investment for mortgage holders, [but] it’s important to consider what impact they may have on the overall housing market and the affordability of housing for all residents,” Auman told Today’s Homeowner.
Bramlett, the Texas real estate agent, said while vacation homes can certainly drive up home prices and create a shortage in the market, it’s not the only factor.
“This trend may depend on the specific city and its unique economic factors,” Bramlett said.
Cities with the fewest vacant homes
In theory, a low percentage of vacant homes would mean that there is a high demand for homes in the city and a low supply in the market. This theory seems to hold true for most of the top cities with the lowest percentage of vacant homes.
For example, Gilbert, Arizona has the lowest vacancy rate (2.1%) of the 179 cities we analyzed. The once small Arizona city saw population growth of 132.8% between 2000-21, growing faster than 97% of cities of similar size.1
According to the Phoenix Business Journal , Gilbert’s popularity grew due to its low crime rate, good schools, and lower cost of living than nearby fast-growing areas such as Scottsdale, Phoenix, and Tempe.
Broken Arrow, Oklahoma (No. 2 on the list of fewest vacant homes) has seen its population grow by 3.88% since the 2020 census.2 Its median home value has increased by 7.9% over the past year, while homes were on the market for just two weeks, according to Zillow data.3
Similarly, Fresno, California (No. 3), once considered affordable, saw an influx of residents during the pandemic, leading to a major housing shortage there. Most of the newcomers escaped the high cost of living in Los Angeles and San Francisco .
Methodology
The data for this study comes from the Census Bureau’s 1-year 2021 American Community Survey. Today’s Homeowner compared data from the 179 largest cities in the U.S. to find the cities with the fewest vacant homes. We looked at two metrics: the number of vacant homes (including all seven types of vacancies specified by the Census) and the total number of homes.
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