A Look at the Nation’s Most Occupied and Most Vacant Cities

Contributing Writer, B2R Finance | Real Estate Investment

By Kerry Curry, Contributing Writer, B2R Finance

Vacancy rates declined nationwide this month as demand grew for residential rental properties. However, vacancies varied widely from less than 1 percent in parts of California and Colorado to high double-digit vacancies in a handful of Midwest and East Coast cities.

More than 1.3 million residential properties (1 to 4 units) were vacant in February, or 1.6 percent, down from 1.5 million (1.8 percent) in September 2015, according to an analysis by RealtyTrac.

Investment properties are more likely to be vacant than owner-occupant properties, according to the report, which showed residential investment properties with a 4.3 percent vacancy rate in February. Still, despite that higher overall percentage, one-third of the market of investment properties nationwide had a 3 percent or below vacancy rate.

Fort Collins, Colorado, had the fewest vacant residential investment properties (0.6 percent), followed by San Jose, California (0.7 percent); Fayetteville, Arkansas (0.8 percent); Provo, Utah (0.9 percent); and San Francisco (0.9 percent).

Pros and cons of low and high vacancies

For investors, low vacancy generally translates into higher demand and strong rent growth, while high vacancy cities can challenge an investor’s ability to keep a property consistently occupied with a stable cash flow.

Investors who are on the hunt for acquisitions will find prices trending higher in those cities with low vacancies. Still, these properties can come with lower risk because of the likelihood of consistent cash flow due to strong demand. Investors will likely find more moderate and discounted sales prices in the nation’s most vacant cities. While that comes with the opportunity for a higher return on investment, it also comes with higher risk due to reduced demand and excess supply.

The highest share of vacant investment properties were found in Flint, Michigan (23.1 percent); Detroit (15.1 percent); Youngstown, Ohio (11.4 percent); South Bend, Indiana (10.9 percent); and Indianapolis (10.8 percent) based on an analysis of metropolitan areas of 100,000 people or more.

The zombie challenge

 The report also looked at “zombie” foreclosures — situations where the mortgage company began the foreclosure process and the owner moved out, but the mortgage company never completed the foreclosure.

These properties essentially are in limbo and often in severe disrepair. These homes, although vacant, aren’t available for purchase by an investor because of ownership issues.

Zombie foreclosures were down 4 percent from a year ago nationwide, but have increased in some markets that have a protracted foreclosure process or a lot of blighted properties.

Metro areas with the most occupied investment properties:  

1.Fort Collins, Colorado

FortCollinsCO

2. San Jose, California

SanJoseCA

3. Fayetteville, Arkansas

FayettevilleAR

4. Provo, Utah

ProvoUT

5. San Francisco, CA

SanFranciscoCA

B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit http://www.b2rfinance.com/apply-now and follow us on Twitter @B2RFinance.

The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.