Rental Vacancy Rate

Reduced rental vacancy rates and statistics indicate COVID-19 sent many renters to the suburbs, driving up area rent prices and emptying cities.

Seasonal rental vacancies, such as vacation rentals or Airbnbs, make up 28.1% of all rental vacancies and are not included in this report.

National Rental Vacancy Rate

The national rental vacancy rate – the percentage of unoccupied units in a multi-family property – has slid in recent years. During some financial quarters, rental vacancies fell below 6%.

• 6.4% of rental units in the United States are vacant.
• The lowest rental vacancy rate of 2020 was 5.7% in the second financial quarter.
• The national rate of vacancy has declined 5.9% over 12 months.
• The vacancy rate has declined 39.6% since 2010, when vacancy hit an all-time high.
• Among rental vacancies, 31.5% are available for rent.
• The homeowner vacancy rate is 0.9%.
• 66.7% of vacant homes are for sale.

COVID-19 & Rental Vacancies

While the 25-year trend of coastal population growth continues, statistics indicate renters are fleeing urban centers as a result of COVID-19.

• Suburban areas have a 5.5% rate of vacancy, a 9.8% decline over 12 months.
• In major cities, rental vacancy rates remain steady at 7.1%, a 1.4% increase over 12 months.
• In nonmetropolitan statistical areas, the rate of vacancy is 7.5%, down 2.6% over 12 months.
• Manhattan’s rate of vacancy has tripled in the past year to 6.1%.
• Rental vacancy rates may have increased from the 2^nd to 3^rd quarter due to the end of a national moratorium on evictions.
• In general, financial service organizations predict vacancy rates will continue to rise.
• The trend of high-income rental growth will continue though rental growth over all will remain low.

Regional & State Vacancy

Rental vacancy statistics indicate renters are fleeing the middle of the country for the coasts; population shifts on the East Coast and in the Midwest are especially dramatic.

• New vacancies are highest in midwestern and plains states.
• In southern states, the rate of vacancy is 7.6%.
• On the West Coast, the rental vacancy rate is 5.1%.
• In the Midwest, the vacancy rate is 6.9%, and in the Northeast, the vacancy rate is 5.6%.
• North Dakota has the highest rate of vacant units at 14.1%.
• Alabama and Kansas both have vacancy rates in excess of 10%.
• New Hampshire has the lowest vacancy rate at 1.9%.
• Vermont and Rhode Island both have vacancy rates below 3%.
• Utah experienced the largest 12-month change, with a 60% increase in rental vacancies.
• Iowa and Minnesota rental vacancies rose by 57% in 12 months.
• Maryland’s rental vacancy rate shrank the most, decreasing 42% over 12 months.
• North Carolina and New Jersey are the only other states that decreased rental vacancies by more than 30%.

Local Rental Vacancy Rates

The emptiest cities have seen further declines in rental vacancy while cities with the highest rental rate rank due to sudden influx in the renter population.

• Richmond, Virginia has the lowest calculable rental vacancy rate among major metropolitan areas, with just 0.5% of units unrented.
• Charleston, South Carolina has the highest vacancy rate, with almost 1-in-4 rental units sitting empty.
• The Top 5 metropolitan areas with the lowest vacancy rates did not rank within the previous 5 years.
• Houston, Texas has a 10.9% rental vacancy rate, which is the highest vacancy rate among major cities where the population exceeds 1 million.
• In major cities where the vacancy rate increased, the average 12-month increase is 31.5%.
• In major cities with decreased vacancy rates, the average 12-month decrease is 14.1%

Unit Rental Vacancy Rates

Certain types of buildings or rental unit structures are more likely to have high vacancy rates. Highrise structures with many small units built after March 2010 are the most likely to have high rental vacancy rates.

• Single family homes have a rental vacancy rate of 4.7%.
• Efficiencies and 1-bedroom apartments have the highest vacancy rates at 24.1%.
• Apartments with 5 or more rooms have a vacancy rate of 4.7%.
• 45.9% of rental vacancies are units with 5 or more rooms.
• Efficiencies and 1-bedroom apartments make up 4.5% of rental vacancies.
• Structures of 10 units or more average 9.7% vacancy; buildings of this type are the most likely to have a high rate of vacancy.
• 30.8% of rental vacancies are in structures with 10 or more rental units.
• Structures built after March 2010 have a vacancy rate of 20.1%.
• 5.1% of vacant rental units are in structures built after March 2010.
• 17.5% of vacant rental units are in structures built prior to 1940.

Excessive Vacancies

One of the many consequences of the COVID-19 pandemic has been the changes in desirable housing characteristics. Localities expecting continued growth are full of new vacancies, leading some communities to experience excessive rental vacancy rates or “hypervacancy”.

• A rental vacancy rate of 12% or more is considered “high”; a vacancy rate of 20% or more is hyper-vacancy.
• With a 23.2% vacancy rate, Charleston, South Carolina is experiencing hypervacancy.
• Among the Top 10 emptiest cities, 3 have seen vacancies increase by over 100% in the last 12 months.
• In Sarasota, Florida, vacancies have nearly tripled.
• In Philadelphia, vacant properties have resulted in $3.6 billion in reduced household wealth.
• The effect of one vacant property on the block could reduce the value of nearby properties by 20% or more.

Historical Rental Vacancy

While the national vacancy rate is just 8.5% higher than it was in 1956, the market has seen volatile changes in the past decade alone.

• From 2010 to 2020, rental vacancy rates declined 39.6% or at an annual rate of 3.96%.
• The steepest decline in rental vacancy was between 1965 and 1971, when rates declined 37.6% or at an annual rate of 6.27%.
• The steepest incline in rental vacancy was between 1957 and 1961, when rates increased 68.9% or at an annual rate of 17%.
• 1978 to 1988, rental vacancy rates rose 60%, or at an annual rate of 6%
• From 2000 to 2004, vacancy rates rose 31.6% or annual rate of 7.9%.
• From 2005 to 2010, housing vacancies overall increased 26.3%.

Rent Prices & Vacancy Rates

As a general rule, rent prices increase as vacancy rates decrease. As empty units diminish, finding an apartment becomes more difficult, and property owners are able to ask for higher prices.

• The median asking rent for vacant units is $1,160 nationwide.
• The average renter pays $1,149 monthly.
• The median rent paid is $909 monthly.
• Units that rent for less than $350 have the lowest vacancy rates at 1.9%.
• Units with monthly rent prices of $2,000 or more have a 10.7% vacancy rate, a 20% increase in vacancy from 2019.
• According to Zillow’s methodology, typical rent prices run as high as $1,750.
• 54.2% of American renters pay less than $1,000 in monthly rent.
• 3.7% pay $3,000 or more in monthly rent.
• In 80% of U.S. counties, the average full-time worker cannot afford rent for a two-bedroom apartment.

Vacancy vs. Availability & Affordability

A vacant apartment is not necessarily available, and those that are available are not necessarily affordable.

• 27.4% of all vacant homes are available for rent.
• 57.8% of vacant housing units are being held off-market.
• 8.6% of vacant homes are for sale only while 8.4% have already rented or sold.
• United States National Housing Act of 1937’s 1981 revision established the “30% Rule” – i.e., housing costs should not exceed 30% of renter income.
• According to the 30% Rule, there are 37 affordable homes for every 100 low-income renters.
• The median rent burden for millennials, the most significant renter segment in most regions, is 45%.
• Households who spend more than 50% of their income on housing are considered to be severely cost-burdened.

Housing Vacancies

Owner-occupied homes see lower vacancy rates on average than rentals do. The current homeowner vacancy rate is 0.9%.

• In the past decade, housing vacancies have declined at an average annual rate of 6.4%.
• Housing vacancies have declined 67.9% since their historic high point in 2008.
• The national rate of homeownership is 67.4%.
• The rate of homeownership increased 4% over 12 months from 2019 to 2020.
• The Midwest has the highest rate of homeownership at 71.2%.

Seasonal Vacancies

Seasonal vacancies are irrelevant for most of this report. It’s not uncommon, however, for landlords in some communities to turn their traditional rental properties into Airbnbs. The trend reversed with travel restrictions in 2020.

• Reservations on hotel booking sites fell 90% in 10 months.
• Usership on hotel booking and reservation sites is down 42%.
• 34% of vacation homes are in the suburbs.
• 33% of vacation home properties are on a beach.
• 19% are in urban areas or cities.
• 15% are in the countryside.

Sources

1. United States Census Bureau (Census), Housing Vacancies and Homeownership
2. Harvard Joint Center for Housing Studies, America’s Rental Housing 2020
3. U.S. Department of Housing and Urban Development (HUD), National Housing Market Summary
4. HUD, Rental Burdens: Rethinking Affordability Measures
5. Elliman Report October 2020, Manhattan, Brooklyn, and Queens Rentals
6. Freddie Mac Multifamily Research Center, 2020 Midyear Outlook
7. Bloomberg CityLab, The Disturbing Rise of Housing Vacancy in US Cities
8. The Empty House Next Door: Understanding and Reducing Vacancy and Hypervacancy in the United States
9. Zillow, October 2020 Market Report & Weekly Market Data (Through Nov. 14)
10. Travel Daily News, Vacation Rental Revenues Halved Amid COVID-19 Crisis, Entire Industry to Lose $35B in 2020