Vacant Homes Aren’t Making Cities Expensive

“The idea behind these vacancy taxes is two-fold. First, the financial penalty would incentivize the owners of empty homes—supposedly real estate speculators holding out for higher rents—to put their properties on the market. Second, the revenue from the tax could then be spent on affordable housing programs.”

“Yet a new report published on vacant properties in San Diego—one of the cities that is now considering a vacancy tax—suggests that any levy on empty units would do little to raise revenue or boost housing supply.

That report, published by the city’s Housing Commission (SDHC), used utility records to determine how many units in the city were left vacant for six months or more. (The study considered a unit unoccupied if its utility usage fell three standard deviations below a 60-month average.)

The SDHC obtained gas and electric records for 468,352 individual units from 2014 to 2019. During those five years, between 1,500 and 3,700 units were vacant for six months or more, giving the city a long-term vacancy rate of between .32 percent and .79 percent.

When examining water records, the SDHC study found 2,183 out of 252,324 units were potentially vacant for six months or more—a vacancy rate of .85 percent.

Contrary to what some politicians think, there isn’t a mass of hoarded homes that would be pushed onto the market by a vacancy tax.”

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