More Numbers That Make Me Go Hmmm…
I need help. Someone explain these numbers (PDF) to me, like I’m six years old.
I mean, I think I have a pretty good education. I think I have a pretty solid record in business operations, marketing, and overall management. I think I know how to read 10-K’s and spreadsheets and so on. But these numbers have me scratching my head.
|Rental vacancy rate||Homeowner vacancy rate|
The Census Bureau did a study in April of 2007 on residential vacancy rates. The real estate bubble supposedly burst in 2005. According to this GAO study, from Q2 of 2005 to Q2 of 2007, foreclosure inventory “rose sharply” by 55%.
So… uh… where are all these people living then?
Look at from Homeowner vacancy rates from Q2 of 2005 in the chart above. It goes from 2.2% to 2.8%. That 0.6% vacancy rate presumably means that some 1.2 million Americans lost their homes (300m population, 68.4% homeownership rate, then 0.6% of that number in additional foreclosures).
Meanwhile, the rental vacancy rate goes from 9.6% to 10.1%? And it went up every single quarter since Q2 of 2005?
Three possible explanations:
1. Foreclosures were happening for the most part on investment properties. Those people who owned foreclosed homes have primary residences; they just walked away from their “quick flip” properties, having lost a bundle of money. But they are not homeless and do not need an apartment.
If true, then the whole “homeowner rescue” legislation is a crock of steaming dung. “Speculator rescue” is more like it.
2. Developers built so many rental units from 2005 to 2007 that despite the increased demand, vacancy rates went up.
One would think one might have heard a thing or two about this.
3. There are now legions of homeless people on the streets of America.
One would think one might have heard about an additional million homeless people.
So which is it? Or is this the magical mystery vacancy rate number?