Determining top and bottom performing markets
When looking at various economic indicators, various lists pop up revealing what analysts name the best and the worst real estate markets across the nation.
BusinessInsider.com has named their ten “sickest” housing markets across America naming vacancy rates, total housing units and unemployment as their three determining factors.
While several of these cities certainly belong in the bottom 10 real estate markets, some do not. Take Oklahoma City for example. This week, CNBC named Oklahoma City as the second best housing market noting factors such as the city’s underwater mortgages being 30.9% below the national average. We look to BusinessInsider’s own note that the city has an unemployment rate of only 4.9%, nearly half of the national average.
Regardless, BusinessInsider’s analysis based on their chosen data points reveals these 10 cities as the worst real estate markets in America:
10. Oklahoma City, OK
Homeowner vacancy rates: 5.2% (6th)
Rental vacancy rates: 9.6% (34th)
Total housing units: 539,077
Unemployment: 4.9%
9. St. Louis, MO
Homeowner vacancy rates: 3.3% (19th)
Rental vacancy rates: 11.4% (18th)
Total housing units: 1,236,222
Unemployment:8.6%
8. Kansas City, MO
Kansas City tied with Detroit for #8.
Homeowner vacancy rates: 3.7% (13th)
Rental vacancy rates: 11% (22nd)
Total housing units: 883,099
Unemployment: 8.4%
7. Detroit, MI
Detroit tied with Kansas City for #8.
Homeowner vacancy rates: 2.4% (32nd)
Rental vacancy rates: 17.2% (3rd)
Total housing units: 1,886,537
Unemployment:11.6%
6. Dayton, OH
Homeowner vacancy rates: 4.7% (7th)
Rental vacancy rates: 10.7% (23rd)
Total housing units: 385,160
Unemployment: 9.3%
5. Baton Rouge, LA
Homeowner vacancy rates: 3.9% (11th)
Rental vacancy rates: 13% (12th)
Total housing units: 329,729
Unemployment:8.4%
4. Atlanta, GA
Homeowner vacancy rates: 5.4% (4th)
Rental vacancy rates: 11.8% (17th)
Total housing units: 2,165,495
Unemployment: 9.7%
3. Memphis, TN
Homeowner vacancy rates: 4% (9th)
Rental vacancy rates: 13.5% (11th)
Total housing units: 550,896
Unemployment:10.1%
2. Indianapolis, IN
Homeowner vacancy rates: 5.2% (5th)
Rental vacancy rates: 13.5% (10th)
Total housing units: 757,441
Unemployment: 7.8%
1. Tucson, AZ
Homeowner vacancy rates: 6.8% (1st)
Rental vacancy rates: 15.9% (6th)
Total housing units: 440,909
Unemployment: 7.8%
According to BusinessInsider.com, the methodology was: Census data on the 75 largest U.S. metropolitan areas and ranked the cities with the highest overall vacancy rates for both homeowner vacancy and rental vacancy for the second quarter of 2011. We picked the cities with the worst rates in each of the two categories to create meta-data ranks. We then removed the cities that had either improved homeowner vacancy rate in either the last twelve months or the last quarter. We believed that any sign of improvement in homeowner vacancies, the more telling of the vacancy rates, should disqualify a city.
To improve our analysis, we also looked at unemployment rates for these cities provided by the Bureau of Labor Statistics. We also used historical median home prices, as provided by the National Association of Realtors.
The analysis shows that some cities have home vacancy rates over 5% and rental vacancy rates over 10%. Obviously, these levels of unused inventory have the effect of driving down both home and rental prices month after month. It also means that there is comparatively little demand for the purchase of new or existing homes. These ten markets are essentially dead as far as real estate prices and sales activity are concerned.
