Scary Note on Home Vacancy Rate

The latest data on home vacancy rate is scary:

(Hat tip to Calculated Risk.)

The companion chart shows that home ownership peaked at the end of 2004:

The nutshell: we kept building lots of new homes in 2005 and 2006, but we didn't put families into those homes (net).  So now there's an historic peak in vacancy rates.  Makes one think that a major correction is in store.

Still, our best estimate is that this overhang gets worked off gradually through diminished new construction.  We continue to be concerned, however, by the second possibility:  that this ends in panic and recession.

Business Strategy Implications:   Those of you in the residential construction industry, don't expect any immediate miracles.  The rest of you, there's still good reason to do some contingency planning for the possiblity of recession.