Banks are Repossessing More Houses Leading to Spiking of Vacancy Rates

February 9th, 2010

The number of vacant homes ready for sale increased in the 4th quarter of 2009 with banks repossessing more houses. The vacancy rate shot up by 2.7% from 2.6% noted in the 3rd quarter according to US Census Bureau. Vacant houses are now numbering 2.09 million in the market having gone up from the previous figure of 1.99 million.

The number of vacant houses increased while those listed with brokers decreased. The survey includes those bank repossessed home for sale sans realtors. It is apprehended that foreclosures would touch 3 million in the current year – exceeding the previous record of 2.82 million noted in 2009 according to RealtyTrac.

Patrick Newport of HIS Global Insight of Lexington in Massachusetts said, “The vacancy rate captures all the properties that are being held off the market by banks, so it shows how much excess inventory there really is.”

During the 3rd quarter about 4.5% of all the mortgaged residences in the country were in foreclosure. It is the highest number since the last 37 years that the Mortgage Bankers Association has been tracking mortgages. Out of ten mortgages one is lagging behind in payment. This rate was 2.9% both in the 1st and 4th quarters of 2008 – the highest in census noting since 1956.

In the 4th quarter there were 18.9 million empty houses – the numbers being inclusive of those homes that were up for sale and vacation unit. It is an increase from 18.8% noted in the 3rd quarter. The ownership rate of residential houses went down from 67.2% to 67.6%.

The Census Bureau includes in its work counting of foreclosed house taking in numbers of vacation homes. The latter are not occupied round the year. Some are being renovated while others are involved in legal wrangles. In the 4th quarter there were 7.69 million empty units in comparison to 7.65 million during the previous quarter.

Within the foreclosure group are counted those empty homes that are up for sale or to be rented. Owner occupied homes that have not yet been vacated are also considered to be vacant.

To spur on purchasing of foreclosed units the government has been offering many incentives – including tax credit. This led to an increase of sales by 4.9% in 2009 – it being the first climb upwards since 2005 according to the findings of National Association of Realtors.