Commentary: Residential Vacancies Don’t Outweigh Need for New Housing

In a piece for Greater Greater Washington, Patrick McAnaney, an affordable housing developer, contradicts the belief that there are enough vacant housing units in the United States to fulfill demand, if only housing was distributed more effectively.

According to McAnaney, “Some level of vacancy is necessary for any functioning real estate market. If there were no vacant units available, finding a home to rent or buy would be impossible. Yet a large number of vacant units can also be a problem, as it indicates an oversupply.” Historically, vacancy rates hover at roughly 7 to 8 percent. A higher vacancy rate gives renters more leverage, while a low vacancy rate forces them to compete and gives landlords more power. 

McAnaney explains that brand new apartment buildings typically take around two years to reach ‘stabilization,’ where the vacancy rate hovers at around 6 percent. “This typical lease-up period can lead to a common misconception by outside observers: A new building with high levels of vacancy is perceived as proof more homes didn’t need to be built.”

As of October 2024, the national vacancy rate was 6.8 percent. In Washington, D.C., the rate is 5.3 percent. In McAnaney’s opinion, “There is simply no compelling evidence that a surplus of vacant homes exists, especially in high-cost cities, like the District. Rather, ‘vacancy trutherism’ is largely based on misconceptions regarding lease-up timelines and economic incentives for newly constructed buildings.” In McAnaney’s assessment, “Adding new supply drives up the vacancy rate to the point where it blunts or even reverses price increases.”