For investors, understanding the overall health of a market is imperative to success.
One metric — an area’s vacancy rates — can help not only in determining financing needs but also how much you can hope to sell the property for. And thanks to a recent report from LendingTree, investors have more insight into what metros have the highest vacancy rates to help them maximize their strategies and achieve their goals.
“If both vacancy rates and home prices are relatively low, it could mean that sellers are parting with their homes for less money than they could have potentially gotten,” said Tendayi Kapfidze, chief economist at LendingTree. “If vacancy rates are low and housing prices are high, it could signify that the market is overly competitive and that lower-income people might have a problem finding a house.”
In addition, Kapfidze said that high vacancy rates and high homes prices typically mean that an area is a vacation destination or hotly contested by investors, indicating that the real estate could be overpriced. High vacancy rates and low home prices might mean that an area is experiencing economic or social challenges such as increased unemployment or crime rates, he added.
Florida’s big metros have high vacancy rates
Miami (17.09 percent), Orlando (15.93 percent), and Tampa (15.25 percent) each reported vacancy rates significantly higher than the national average of 9.44 percent, according to LendingTree. Vacancy rates are high in these areas in thanks in large part to Flordia’s popularity as a state for secondary residences, meaning they remain unused most of the year.
Lowest vacancy rates are in San Jose, Minneapolis, and Denver
San Jose (4.26 percent), Minneapolis (4.96 percent), and Denver (5.35 percent) are all well below the national average vacancy average of 9.44 percent, LendingTree found. These metros enjoy a combination of factors that keep vacancy rates low, including strong job markets, growing economies, and an increasing population of Millennial homebuyers.
Pittsburgh, Cleveland, and Memphis offer affordable options
With higher-than-average vacancy rates (above 10 percent) and median home values lower than $150,000, Pittsburgh, Cleveland, and Memphis might offer investors better deals.
Here are the top 10 metros with the highest and lowest vacancy rates around the United States.