One of the reasons that some of us recognized the housing bubble is that vacancy rates were skyrocketing. The rise occurred first in rental housing and then among ownership units. In advanced economics we learn about something called "supply and demand." The implication of the excess supply implied by the jump in vacancies was that prices would fall. For some reason, almost no one in the media (or apparently at the banks) paid attention: hence the unofficial motto of the housing crash and resulting crisis, "who could have known?" Anyhow, it seems that even now almost no in the media is paying attention to the vacancy data. The fourth quarter release from the Census Bureau shows the vacancy rate in ownership units rising to 2.9 percent, a new record that is more than 50 percent higher than any pre-bubble rate. The vacancy rate for rental units edged higher also to 10.1 percent. This is far higher than prior peaks, but a bit lower than the 10.4 percent vacancy rate in the first quarter of 2004. Homeownership rates continued to slip lower. At 67.5 percent, we're back to the 2000 rate. 1.5 percentage points below the peak rates in 2005 and 2006.
--Dean Baker
