The Lights Are on, But There's Nobody Home

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No, I'm not talking about economics reporters or the brilliant economists who somehow failed to see the housing bubble (and the stock bubble), I'm talking about the Census Bureau's release of data on vacancy rate for thethird quarter. The data show that vacancy rates have climbed to yet another record high. The big story is on the side of vacant ownership units. The vacancy rate for rental units has hovered near its record high for the last three years. However, the vacancy rate for ownership units is up nearly 50 percent from its level as of two years ago. While the actual rate (2.5 percent) might still seem low, not many people can afford to pay the mortgage on a home that they are not using, nor are renting out. This suggests further downward pressure on prices in the months ahead. As best I can tell, this Census Bureau release was not mentioned in any of today's economic reporting. I agree that the weak 3rd quarter GDP growth was the big story, but if you want to know where the economy is going in the future, this information about the fundamentals in the housing market is hugely important.

--Dean Baker

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