Michigan's home vacancy rate rises

Michigan's home vacancy rate rises

Only Florida, Nevada rank higher on list; problem most acute in Metro area.
Marisa Schultz / The Detroit News

The percent of non-rental homes that sit vacant on the market has risen markedly in Michigan, another example of how the state's beleaguered economy and foreclosure crisis have hit home.

Just two states rank higher -- Florida and Nevada -- for the rate of homeowner vacancies, according to census statistics released earlier this year. But unlike Michigan, those states have something powerful working in their favor: growing populations.

"If they stop building homes in Florida, they will eventually fill up," said Donald Grimes, senior research specialist in economics at the University of Michigan.

"Michigan has excess homes and a declining population, and that's a really bad combination."

In all, 3.8 percent of owner-occupied homes in the state are vacant and for sale, compared to 2.7 percent nationwide. The problem is more acute in Metro Detroit, where the vacancy rate is 4.1 percent compared to 2.8 percent among other metropolitan areas in the country.

The high vacancy rates come as no surprise to economists, Realtors and neighborhood residents. "For Sale" signs in front of empty houses have become a staple in communities throughout Metro Detroit. In many cases, their owners couldn't keep up with their mortgage payments and became victims of the foreclosure crisis.

"There's definitely more vacant homes now than two-three years ago," said Tom Goddeeris, executive director of the Grandmont Rosedale Development Corp., a nonprofit community revitalization organization in Detroit. "Just like everywhere else in Detroit, the number of foreclosed properties has increased over the last couple of years."

The negative impact of empty houses extends well beyond the former homeowners. Long grass, no snow removal and blight are among the problems often associated with abandoned homes. The longer they sit, the more likely they can become targets for thieves, vandals and squatters. And if they are sold, the price is often well below the market value.

"It brings the rest of the neighborhood home values down and makes it tough for others who want to sell down the road," said Scott Cummings, president of Mid American Mortgage in Auburn Hills.

The decline of the Detroit Three automakers, high unemployment and staggering foreclosure rates all combined to make a depressed real estate market in Michigan.

"I've been doing this now for 16 years, and this is as slow as I've ever seen," said Cummings, who hopes the downward trend is close to bottoming out.

Michigan wasn't always at the top for vacancies. In fact, Michigan's vacancy rate fared better than the national average throughout the 1990s. But by 2002, the trend reversed and the gap continues to widen.

It frightens Grimes that the rates have escalated, especially since Michigan wasn't doing economically well in the early 1990s but still managed to have better-than-average vacancy rates. Having such a disparity now could signal something serious, he fears.

"That's a very bad sign when those numbers are going up." Grimes said.

In the meantime, neighborhoods and community groups are doing what they can to care for vacant homes.

"Neighbors who live next to those homes are very good about keeping a watchful eye on those things," Goddeeris said of the Grandmont Rosedale communities of northwest Detroit.

"They'll make sure those houses look good."