Empty houses lead to lower prices

FAR - News & Events - Empty houses lead to lower prices: "Empty houses lead to lower prices

WASHINGTON – Jan. 9, 2007 – With spring right around the corner, many housing industry experts are hoping the real estate market will see some noticeable improvements.

However, there is one snag that can potentially keep prices down – the large number of vacant homes for sale and rent.

In the third quarter of 2006, there were 5.7 million vacant housing units, accounting for a record 4.6 percent of all U.S. homes, according to the U.S. Census Bureau. The average in the 1990s was about 3.5 percent. To get this ratio back to normal, 1.3 million vacant homes need to be occupied.

Lots of empty homes pushes home prices downward, says Credit Suisse analyst Ivy Zelman. Owners of unrented, unsold homes must pay for insurance, lawn service, taxes and, often, a mortgage.

Seeing those costs pile up can motivate an owner to sell or rent at much lower prices. When a house sells at a lower price, other would-be buyers expect lower prices as well.

Source: The Wall Street Journal, Justin Lahart (01/08/2007)"