Scary Housing Data

But couldn't there be an effect such as: the homes now vacant are out of style, everyone wants the new type of house over there with the such-and-such latest gizmo. It would just mean that the house market has hit a stage of extreme product differentiation.

Over 14% of residences in the US are empty? Really? That number seems awfully high, not that I have any real evidence to dispute it.

Something does seem odd about these figures.

If the vacancy rate for pre-2000 homes is 2%, and the vacancy rate for homes as a whole is 14%, that would make the vacancy rate for post-2000 homes insanely high (possibly over 100%, depending on the ration of pre to post-2000 homes).

But WHERE are the vacant houses? I met a guy on a plane who told me about a town in Indiana where he worked where there were blocks and blocks of vacant houses. The town was just shrinking, jobs were going away, there was nobody to live in them. An inventory of vacant houses in Gary, Indiana doesn't have to be filled before builders can start expanding in Fairfax.

Of course, the obvious response when a housing surplus is leading to a building bust and a recession is to let in more immigrants. But since decent, rational people support more immigration anyway and nativists seem to be indifferent to the economic costs of their program, I'm not sure who to try to persuade with that argument.

It would just mean that the house market has hit a stage of extreme product differentiation.

Quite. Indeed, I have the impression that a lot of the new building is done on lots previously occupied by other (smaller) houses. I'm guessing Kling's speculation that the banks may already own most of the vacant properties is on the right track.

But, But, But

It was just two years ago that you claimed all these houses were a sign that we were a lot better off than the government data showed.