Detroit’s Address Vacancy Rate Increases
The latest analyses of the Federal Reserve’s Open Market Committee (the Fed) indicates that nationally the residential real estate sector remains weak for the most part. However, the Fed points out that some local real estate markets are doing fairly well. Nevertheless, the housing market as a whole continues to face three major challenges:
1)a continuing large number of foreclosures and other distressed properties;
2)uncertainty about the future of home prices; and,
3)tight underwriting standards for mortgage loans.
One measure that can be used to judge trends in local real estate markets is the share of buildings that are vacant at a particular moment in time. The newest source of vacancy data comes from the US Postal Services (USPS) via the Department of Housing and Urban Development (HUD). HUD recently entered into an agreement with the USPS to aggregate and publicly release Postal Service data on vacant addresses on a quarterly basis. The USPS data covers the entire universe of
Using the 25 HUD /USPS extracts since December 2005, a time-series database consisting of over 1 million records that describe the address vacancy conditions in every census tract in the United States has been created.
There are a number of basic measures for this data set including:
•Total number of residential addresses;
•Total number of residential, business and other addresses that are vacant;
•Vacant , as defined by the USPS, means the resident(s) have not collected their mail for 90 days or longer.
•Total number of addresses that are “no-stat” (i.e., temporary vacancies).
•The “no-stat” category is separate from vacant; it includes: a) addresses under construction not yet occupied; b) rural addresses vacant for 90 days or longer; c) urban addresses identified by a carrier as not likely to be active for some time (e.g., if a building being demolished is to be replaced by another building, the address is preserved and considered “no-stat”).
The following figures and maps are based on the USPS/HUD data.
In this chart, quarterly vacancy data begins in December 2005, which is the row of data labeled as “1205” under the column header “Quarter”. In March 2008, the USPS began to differentiate residential addresses from businesses and other types of addresses, which begin with the fifth column labeled “Residential”.
For March 2012, the overall vacancy rate increased from 20.93 to 21.19 – as 833 addresses became vacant. The vacancy rate for each property type (residential, business and other) vacancy increased slightly from December 2011. For all quarters in which the USPS differentiated between types of addresses, the vacancy rate for businesses has been higher than the vacancy rate for residences.
The overall address vacancy rate in the City of Detroit has increased from just over 10 percent during 2005 to just over 21 percent for 2012.
In March 2010, the USPS made changes to its counting procedures to improve the accuracy of the vacant indicator. While these new methods should improve data quality over time, caution should be used in measuring change over time. For that reason, it can be generally observed that vacancy in Detroit is increasing, but it may not be as straightforward to make year-to-year comparisons. For more information, see the following http://www.huduser.org/portal/datasets/usps.html.
The map above of census tracts in the City of Detroit illustrates spatial patterns in overall address vacancy rates for March 2012 . There are clusters of neighborhoods (shaded purple) with vacancy rates exceeding 30 percent, including the Brightmoor area on Detroit’s west side, the State Fair-Nolan area, the Tireman area, and numerous neighborhoods on Detroit’s east side; a few have vacancy rates exceeding 50 percent.
This map of the City of Detroit shows the change in address vacancy rates by census tract from March 2011 to March 2012. The red areas indicate areas showing increases in address vacancy by more than 1 percent during the past year. Green areas showed declines in vacancy rates (improvements) for this same period.
Areas shaded in gray showed little or no change in the past year (i.e., +/- 1 percent). As illustrated, several areas on Detroit’s west side showed signs of improvement, including the Grandmont/Rosedale and 7 Mile/Greenfield neighborhoods. Other improvements included a big decline in address vacancy in Midtown and some modest improvements in areas along East Jefferson Avenue, on Detroit lower east side.