The nation’s vacant homes present an opportunity — and a problem

This story was first published by Stateline, an initiative of The Pew Charitable Trusts on Nov. 22, 2022.

With construction costs for new homes and interest rates soaring, vacant housing is drawing more attention as a shortcut to quickly getting more units on the market.

But whether vacant homes are a curse or an opportunity depends on where you live.

As housing affordability plummets and rents rise, putting more families with low incomes at risk of losing their homes, some cities are working to take advantage of unused properties. But there often is a mismatch between the location and condition of vacant homes and where they are most needed: Those in Appalachia might be run-down and in no shape for rehabilitation. Vacant homes in luxurious locales from New Orleans to New England are the second homes of the nation’s elite.

And Americans living in motels, in their cars or on the streets often aren’t in the same states — or even the same time zones — as the vacant houses that could be repaired and offered as shelter.

“In most of the country, the vacant housing issue is one of blight, and it’s not entirely practical to simply give it to the homeless,” said Darrell Owens, a policy analyst for California YIMBY, a Sacramento-based group advocating more market-rate housing to counteract shortages. “Detroit has long-term vacant housing, but it’s not logical or ethical to move people from California to Detroit and say, ‘Here’s your allocated run-down house. Go take it.’”

Homes used for vacations by the wealthy, meanwhile, are a sign of extreme income inequality alongside homeless populations in places such as New Orleans.

“I walk through my neighborhood and see a ton of houses that are just owned by wealthy people from out of state, the pied-à-terres. These residents come in and use them once a year for Mardi Gras,” said Nathan Robinson, a sociologist and founder of Current Affairs magazine, in a transcribed interview for the magazine in October.

“I have to say, that gets under my skin. It really does, especially when I see this huge homeless population,” he continued.

In popular areas priced out of reach for service workers, vacant units can be key to keeping them from falling into homelessness.

In Los Angeles, where new apartments can easily rent for more $5,000 a month, vacant apartments could become a crucial lifeline for families with low incomes, said Susie Shannon, policy director for Housing Is a Human Right, a housing advocacy division of AIDS Healthcare Foundation.

The organization has bought and fixed 1,400 apartments over the past three and a half years in Los Angeles, she said, at a cost of about $100,000 each. That’s a fraction of the $600,000 the city may spend on building a unit of homeless housing from scratch.

“We’re setting an example for doing it faster and cheaper,” Shannon said. She cited utility statistics showing 70,000 vacant units in the city, enough to house all the 42,000 homeless people counted in the city this year, or even the 69,000 in all of Los Angeles County.

Recent clients include a couple with two small children, both working jobs near minimum wage. They’re now placed in a motel waiting for their turn at a rehabilitated unit.

Seasonal Tourism Homes

Vacant home statistics can be puzzling, and it’s hard to pinpoint where efforts to reclaim homes might be fruitful.

The highest shares of overall vacant housing are in Maine (20%), Vermont (20%) and Alaska (17%), where summer tourism creates a demand for seasonal homes, according to a 2021 U.S. Census Bureau survey. The survey defined homes as “vacant” if nobody was living there at the times, spread out over a year, that the census asks questions. Very little of that housing is reclaimable for other people, according to a Stateline analysis.

Only about 2% of homes in Maine and Vermont are vacant because they are abandoned, need repair or are caught up in foreclosure or other legal or family disputes that might be resolvable. The rest are temporary homes or already on their way to being sold or rented, according to detailed census breakdowns released earlier this year for 2021.

Metro areas with the most vacant housing are expensive waterfront resorts — Key West, Florida; Barnstable, Massachusetts on Cape Cod; and Ocean City, New Jersey — suggesting that vacant housing is being used for vacationers.

Vacant homes that might be reclaimed are more common in the Deep South and Appalachia, where 6% to 7% of homes are vacant for potentially solvable issues in Alabama, Louisiana, Mississippi and West Virginia, according to the Stateline analysis.

In Louisiana, damage from two 2020 hurricanes contributed to giving the Lake Charles area the nation’s highest rate of vacant housing in disrepair, about 7% or 7,200 homes. Mayor Nic Hunter said in a statement to Stateline that he expects 90% to 95% of the city’s vacant housing to be ready for use by the end of this year.

But many of the reclaimable vacancies are in areas without a lot of demand for housing, said Alan Mallach, a senior fellow at Center for Community Progress, a nonprofit advocating more reuse of vacant property.

“In the Deep South, Appalachia and the Plains states, thousands of houses have been effectively abandoned and left to rot. These are all areas where the supply exceeds the demand and more people are leaving than moving in,” Mallach said.

The same is true for low-income areas of Baltimore, Chicago and Detroit, he said.

“The crux of the problem is that in areas with strong demand for housing, vacancies tend to be low, while they remain high in areas with weak demand, where many, probably most of the vacancies need major investment to put them back to productive use,” Mallach said.

In high-demand areas such as San Francisco’s Bay Area, many vacancies are short-lived as owners prepare homes for the market, while less sought-after areas such as Detroit have more vacancies lasting years, according to an analysis of census data by Owens, of California YIMBY.

New Life for Vacant Houses

Cities such as Baltimore, Maryland, and Syracuse, New York, are struggling with vacant housing units. In Baltimore, one city proposal is to convert single-family row houses to apartments to make rehabilitation more financially feasible, but investors are growing increasingly interested in vacant homes there anyway. Syracuse charges a fee for vacant residential properties that rises every year to encourage landlords to put them back into use.

Abandoned “zombie” homes with unclear ownership wreaked havoc in New York state in the 2010s. A 2016 state law requires mortgage lenders to check for vacancy when homeowners fall behind on payments and to perform routine maintenance. The law also helped local governments hire more staff and get more data on homes to prevent future problems. 

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And some cities are experimenting with vacancy taxes to discourage unused apartments. Washington, D.C., pioneered extra taxes for vacant and blighted property in 2011, causing sticker shock for some homeowners who say their homes were mistakenly designated vacant. And San Francisco this month passed a vacancy tax.

“People are fed up with tens of thousands of homes sitting vacant while thousands of people sleep on the streets,” Dean Preston, a Democratic Socialist member of San Francisco’s Board of Supervisors, wrote in a tweet after the projected win. The tax would go on property that is vacant more than 182 days a year and would raise money for rent subsidies and affordable housing.  

About 4,000 housing units could be subject to the tax, which could bring $15 million by 2026, according to a city estimate, creating a “small positive impact” if it prompts some landlords to rent out apartments rather than pay the tax.

Oakland, California, raised $7 million for homeless assistance with its vacancy tax in its first year, 2019. The tax of up to $6,000 targets homes used fewer than 50 days a year and was approved in 2018.

Not all reclaimed housing is headed for low-income use. The Detroit area, which has the country’s highest raw number of vacant homes in need of repair, about 12,600 as of 2021, has seen some homes fixed up and flipped for market-value sale.

Kyle Dubay renovated an abandoned, fire-scarred North End home and put it on the market for $475,000, in an area where the median price is about $189,000. Dubay scours vacant houses and other buildings for building materials and found the 1905 house was in good shape structurally, so he decided to buy and renovate it himself using material from historic buildings.

“I think it makes more sense to rebuild a house than tear it down,” Dubay said. “That’s so wasteful. But it’s very expensive now, the price of lumber is two to three times what it was a few years ago, plumbing supplies are up, everything’s up.

“The problem in Detroit is that so many houses have been abandoned for so long that they require just an insane amount of work.”