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Florida cities top among highest vacancy rates in country

Miami has the 2nd-highest vacancy rate in the country at 12.56%, according to LendingTree
Posted at 1:11 PM, Oct 25, 2023
and last updated 2023-10-25 16:23:08-04

According to the U.S. Census Bureau, in America's 50 largest metro cities, there are currently close to 5.5 million vacant homes.

It's a startling number, but what does it really mean? And is it a sign of more real estate woes to come?

Everywhere you look in some of Florida's big cities, one can see "For Sale" signs or empty houses. It's a tell-tale of what's considered to be a "vacant home."

"That's part of the set, but it also includes vacation homes, homes that are being built but not yet occupied," Ken Johnson, a real estate economist at Florida Atlantic University's College of Business, said.

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Ken Johnson explains what high vacancy rates mean to Florida residents and the real estate market.
Ken Johnson explains what high vacancy rates mean to Florida residents and the real estate market.

Johnson said a vacant home has a broad definition. But the one example that could be the reason for the high vacancy rates across the country is short-term rentals.

"Short-term rentals kind of fall in this nether region, where they are not really vacant but they are working more like vacation housing, but not permanent vacation housing because the owner is not necessarily living there, but they are using it more like a hotel," Johnson explained.

According to LendingTree, when you look at all the metro cities, Miami has the second highest vacancy rate in the country at 12.56%. Tampa is in the third spot at 12.15%.

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In both cases, the most common reason for the vacancy is that the unit is used for seasonal, recreational or occasional use — like a short-term rental.

But is the high number of vacancies a bad thing?

"Not necessarily," Johnson said. "A lot of these units are in the short-term rental category, but it's also the economy working. As they become vacant, truly vacant, as the economy comes down, owners feel pressure to strike a deal, so maybe they ask for a little bit less in price or give a little bit on their terms. So that's where we tend to see pricing flatten out."

Johnson said the census data for vacancies can be overestimated. But the way things are looking now could be a sign of a relatively stable real estate economy.

"We are getting to the point that the housing prices are going to slow down, flatten out or even decline," Johnson said. "But a decline looks very unlikely in Florida at this point and time, simply because we have such a strong demand to live in this area, and we haven't built enough units in the last 15 years. But historically, and I believe this time too, this is just another signal that we are reaching the peak of the housing market."