In a properly functioning housing market, there should be some vacant units available for sale or rent. Vacant units for sale or for rent allow households who want to move to find an available unit. When there are lots of households looking for housing, and not enough units on the market, landlords are able to raise their rents because would-be tenants have few other options. For sale units see bidding wars that drive up the price. Households at the lowest end of the income spectrum experience the worst of it.
Of course, too much vacancy results in units that can’t be rented, landlord disinvestment, and declining property values. A study by the Joint Center for Housing Studies used historical trends to benchmark a “natural” vacancy rate for rental and ownership of 7.4% and 1.5%. These values correspond to rates in the mid-1990s before Massachusetts started seeing the most extreme price increase.
Not all vacant units are available for sale or rent. Some homes are used for seasonal occupancy, vacation homes, or short -term rentals (discussed below). Others are kept as a second home for people who split their time between two places. While these “unavailable units” are part of the housing stock, they aren’t serving as permanent housing. We don’t count them when calculating vacancy rates.
In Massachusetts there were about 258,000 vacant units in 2018 – 2022. However, only 47,800 (less than one fifth of all vacant units), were available for sale or rent. Others were being held for seasonal use, had been rented or sold but not yet occupied, or were vacant for another reason. That means that only 1.6% of all homes were available for sale or rent.
The number of homes available for sale or rent has been declining for the past twenty years. In 2006 – 2010, there were an estimated 54,300 homes for rent at any given time, and 23,700 for sale. By 2018 – 2022, the estimated number of vacant units for rent had dropped to 35,400, and the number for sale had dropped to 12,400. This is a 40% decline in the absolute number of vacant homes for sale or rent.
Meanwhile, other “unavailable” vacancies have been increasing. The number of “other vacant” units grew by about 2,500; and the number of units “sold but not yet occupied” doubled from 6,800 to 14,000 over the 2006 – 2022 time period. This latter category may include luxury homes purchased as stable investment assets, not intended for occupancy.