It’s no secret that the U.S. housing market has seen better days. From falling home values and impaired labor mobility to backed-up inventories and a flood of foreclosures, the real-estate downturn has affected the economy at large in countless ways.
One of the unfortunate results of a bad housing market are empty homes. Vacant properties have increased by 43.8 percent nationwide since 2000, according to the Census Bureau. Homes can be vacant for many reasons, but are defined by the bureau as both unoccupied rental inventory as well as homes that are unoccupied and “for sale.” As of 2011, there were about 14.3 million year-round vacant housing units in the country, with a 10.6 percent gross vacancy rate that excludes seasonal vacancies such as vacation homes.
Earlier this year, the Cleveland Federal Reserve analyzed the impact of foreclosed and vacant homes on the surrounding communities. The study found that a vacant or tax-delinquent house decreases the value of nearby homes by at least 1.3 percent, thanks to poor maintenance, and making the neighborhood appear less desirable.
This effect is amplified in higher-income neighborhoods where a vacancy or foreclosure has a negative price impact of 4.6 percent. In low-poverty areas, each additional vacant or tax delinquent home was found to reduce values of surrounding properties by between 1.7 percent and 1.8 percent.
Each quarter, the Census Bureau publishes data on homeowner and rental vacancies in the 75 largest cities. Listed here are the five cities with the most vacancies, using a weighted ranking of both rental and homeowner vacancies based on a 12-month average of both kinds of vacancy rates to smooth out sampling errors. Weights are assigned to rental and homeowner vacancies according to the national proportion of homes to rental properties in the U.S. Our list reveals the most significant outliers in both categories relative to other major U.S. cities.
So, what are the emptiest major U.S. cities? Read on to find out:
5. Richmond, Va.
Rental vacancy rate: 15.1%
Homeowner vacancy rate: 2.4%
With a rental vacancy rate of 15.1 percent, Virginia's capital ranks fourth among all major U.S. cities for empty rentals over the past year, with the first quarter of 2012 showing a 19 percent rental vacancy rate. However, Richmond’s homeowner vacancy rate ranks only 27th among the country’s 75 largest metro areas, and stands just 0.2 percent higher than the average for large metro areas.
Rental vacancy rate: 16.9%
Homeowner vacancy rate: 1.7%
Detroit was one of the hardest-hit cities in the recession, and with an unemployment rate of 9.9 percent as of May, it's little wonder that its 16.9 percent rental vacancy rate is the second highest in the country. Surprisingly, though, the homeowner vacancy rate remains below the 75 largest metro area's average of 2.18 percent. According to the Census Bureau, at the end of 2011, Detroit had a gross vacancy rate of 12.2 percent, a level the city has virtually maintained since 2006.
3. Memphis, Tenn.
Rental vacancy rate: 15%
Homeowner vacancy rate: 3.1%
Memphis' proportion of vacant homes, both owned and rentals, puts it third overall, thanks to an average rental vacancy rate of 15 percent that is the fifth highest in the nation and the 3.1 percent homeowner vacancy rate that ranks 13th.
2. Dayton, Ohio
Rental vacancy rate: 11.3%
Homeowner vacancy rate: 5.4%
The good news is that Dayton's homeowner vacancy rate has been trending downward since its peak in the third quarter of 2011, when it stood at 6.5 percent.
However, even this improving number gives Dayton the distinction of having the highest average homeowner vacancy rate in the country, according to the Census Data. And Dayton’s average rental vacancy rate, at 11.3 percent, is higher than the 75-city average of 9.2 percent. The Census Bureau calculations put Dayton’s gross vacancy rate at 16.9 percent, more than 6 percent above the large city average, and the highest in the country.
1. Orlando, Fla.
Rental vacancy rate: 18.8%
Homeowner vacancy rate: 2.2%
The emptiest city in the United States is Orlando, Fla. The 12-month average for rental vacancies stands at a staggering 18.8 percent, while in the first quarter of 2012 this number was 22 percent, highest in the nation. Florida's third-largest city also has an above-average homeowner vacancy rate, but this metric has been rising during the past two quarters, according to Census Bureau data.
Despite its housing woes, Orlando has been able to avoid the financial woes of other cities, such as Harrisburg, Pa., and San Bernardino and Stockton, Calif. According to Orlando’s most recent annual report, the city has more than $125 million of cash in its general fund and over $1.1 billion in total assets (including nearly an additional $300 million in cash and cash equivalents in other funds), compared with just under $600 million in total listed liabilities.
See more of America's emptiest cities.