Let’s do a “top ten countdown” of the sickest housing markets in the country. While the entire country has had a housing meltdown in the last four years, some areas have suffered more than others. 24/7 Wall St. pulled Census data on the 75 largest U.S. metropolitan areas and ranked the cities with the highest overall vacancy rates for both homeowner vacancy and rental vacancy for the second quarter of 2011. There were some other more complicated methodology items involved, and they brought them together to come up with a top ten list of the sickest markets. Here’s what they came up with:
10. Oklahoma City, OK
Homeowner vacancy rates: 5.2%
Rental vacancy rates: 9.6%
Total housing units: 539,077
Unemployment: 4.9%
From the previous year, home sales in Oklahoma state have dropped by 7.7%, and the median home price dropped by 8%.
9. St. Louis, MO
Homeowner vacancy rates: 3.3%
Rental vacancy rates: 11.4%
Total housing units: 1,236,222
Unemployment: 8.6%
St. Louis lost more than 82,000 jobs in 2008 and 2009. The median sales price for single family homes has fallen more than 19%.
8. Kansas City, MO
Homeowner vacancy rates: 3.7%
Rental vacancy rates: 11%
Total housing units: 883,099
Unemployment: 11.6%
The median home price in the city is down $19,000, more than 13% since 2008.
7. Detroit, MI
Homeowner vacancy rates: 2.4%
Rental vacancy rates: 17.2%
Total housing units: 1,886,537
Unemployment: 11.6%
Among the hardest hit cities in the country, Detroit has lost approximately 323,400 jobs since 2005. One estimate shows more than 90,000 abandoned lots and homes in 2010. It’s not at the top of this list for other reasons, one of which is that many of the vacant homes have been demolished.
6. Dayton, OH
Homeowner vacancy rates: 4.7%
Rental vacancy rates: 10.7%
Total housing units: 385,160
Unemployment: 9.3%
The median home price in Dayton has fallen by 29% since 2008.
5. Baton Rouge, LA
Homeowner vacancy rates: 3.9%
Rental vacancy rates: 13%
Total housing units: 329,729
Unemployment: 8.4%
Being the capital city of Louisiana, and the money generated to come back from Hurricane Katrina have helped this city. However, they apparently built too many post-Katrina homes and can’t fill them.
4. Atlanta, GA
Homeowner vacancy rates: 5.4%
Rental vacancy rates: 11.8%
Total housing units: 2,165,495
Unemployment: 9.7%
The unemployment rate in Atlanta is higher than the national average of 9.2%, with more than 25,000 jobs lost from June 2010 to June 2011. The median price of a home has dropped $50,000 since 2008.
3. Memphis, TN
Homeowner vacancy rates: 4.0%
Rental vacancy rates: 13.5%
Total housing units: 550,896
Unemployment: 10.1%
An extremely high unemployment rate is keeping the city down, though their rental vacancy rate has improved significantly from a staggering 21.2% in 2010.
2. Indianapolis, IN
Homeowner vacancy rates: 5.2%
Rental vacancy rates: 13.5%
Total housing units: 757,441
Unemployment: 7.8%
From second quarter 2010 to the same period in 2011, the median home price in Indianapolis dropped by 15.3% or $20,000.
1. Tucson, AZ
Homeowner vacancy rates: 6.8%
Rental vacancy rates: 15.9%
Total housing units: 440,909
Unemployment: 7.8%
Tucson’s homeowner vacancy rate has more than doubled from just a year ago, a significant factor in its number one rating here. Median home prices have dropped by 18% in the last year, and by more than 33% since 2008.
What about investors in these cities? Well, “it’s always darkest before dawn” may perk you up. There is always opportunity in any market, you just have to adjust strategies and pay attention to your due diligence. Fall in love with the numbers, not the property.
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What do these figures mean?
Market dictates prices...if people cannot afford these homes until now, what makes us think they can afford it six months, or a year down the line?
Las Vegas was hot over the past year but property prices are still dipping...people who invested then have now a white elephant on their hands.
The government is also not giving investors any confidence in investing in anything, the stock market nor real estate.
My question is...as a mentor in real estate, I understand you have to keep an optimistic outlook...will mortgage rates be going up by summer of next year? Will real estate prices start climbing back up - by the Fall of 2012? What do you see happening and why?
Mortgage Rates
In my view interest rates would be sky high now if not for the intervention of the FED. We've seen inflation all around us just about everywhere (food, oil,commodities)except for Real Estate. The FED is holding the line on rates now and just announced that they intend to hold bank rates where they are at now(until +- 2013), near zero (to us 4-5% at best)through 2012 anyway. If not for keeping the rates this low there would be serious problems like the late 1970's. The short story, IMO rates will remain low until after the 2012 election but lock in any long term at todays rates ASAP. The fed will not be able to keep rates low after that. Extreeme high rates are coming. Another subject,in the WSJ this morming, Gov't is seeking ideas on what to do with the hugh inventory of REO properties on Fannies and Freddies books and more are coming. To me it's real simple; rescind the 1980's Passive/Active tax laws and rules; you would have a tidal wave of private investors jump in the RE investing market. Prices would rise, jobs would be created; just what we need today. Look back at how healthy the RE investor market was prior to the tax change and before the politicans killed it with their meddling. No other group had the impact on RE ninvesting as did the small investor. Politicans just couldn't bring themselves to allow the small investor enjoy the tax breaks as was enjoyed by the large corp. investors. We need to get Dean on the floor of the house in Washington DC and give those perveyors of disgust a speech, some direction and education. He needs to be sure to take a sack of rubber chickens with him, but then they still wouldn't get it. Ed
Mortgage
I remember selling real estate when the rates were 18-20% and we had a loan called negative amortization. Then came the '80's and the RTC. I think this is going to be worse than that at some point in the next 2-3 years. You can't hold interest rates this low for much longer. People want and need to make money with their money. Who wants to earn .05% on your savings in a bank?
Dean is right. Now is the time to invest in real estate and our tax laws should make it inviting again.
lock them in NOW!
The interest rates haven't been this low for a long long time! It is an unbelievable opportunity for all of us!
buy your properties NOW!
refinance NOW!
this is not going to last forever; all good things must come to an end
wishing everyone success,
Valerie
Tampa Bay area
I know that, living here in the Tampa Bay area, it's not in your top 10 but it's bad down here. New construction is basically at a standstill, and I'm seeing more houses basically become crack houses. Recently there was a guy who was squatting in a house and dealing drugs out of it that got killed because he barracaded himself in the house that didn't belong to him. Homeless people are just squatting in houses that are owned by the bank. How do you manage to deal in houses that might possibly become crack houses? I have to ask that because that's what's going on here.
Anita
Anita
I was wondering the same thing.
OK, we got the worse housing markets, now what? Buy properties that are surrounded by vacant squatters on all sides? How long will we have to hold until conditions improve? etc, etc.
Not to mention that some of these cities are in Florida. What if it takes ~5 years for the market to stabilize and show life down there. What will happen if a hurricane passes through? How many ppl will actually want to rebuild after that?
There are good, down cities and then there are cities that you have to wait to solidify before you go in and start buying.
It all Depends
As Dean, Matt, Carol, Indiana Joe, and others have stated that your investment strategies should depend on a number of variables such as present and upcoming economic indicators.
I feel that if we follow the strategies laid out in the rock bottom blue print, Dean's books, etc. we will not be lead astray.
Do your homework and invest wisely. There may be a demand for rentals in these areas. I wouldn't know or speculate until I did my homework.
Leon J.
Don't get sucked in to the doom and gloom!
Hi from Tampa Bay, Florida, where we continue to put a house on the rental market and get 10-12 applicants jumping on it (GREAT WAY TO BUILD A BUYER'S LIST) within 24-48 hours. Also, I invite anyone who is a skeptic to attend our local Monday night investor meeting and look around the room of 50-60 investors when our leader asks how many of us have vacant homes for rent and no hands go up. The obvious by-product of the horrible foreclosure rate here is that people are forced to rent, and great rentals are hard to find. Fill the need, and there's no such thing as a down market for an investor! Just sayin'...
Lois...
thanks for the reality check!
Interest Rates
I think they'll stay the same or even dip a little. The Administration can't force the economy to grow.
Anita-doom and gloom
Just get it at the right price. Make it shine with a rehab, and it will rent.
We own a house in Dayton, Oh (6th on the list) that we just rehab. We bought it right and made it beautiful. It was rented before the rehab was complete. Great rental property when they are in good shape. There is a lot of junk out there so when you fix it up, the renters gobble it up.