The housing bust, it turns out, is largely a new-housing bust—at least as measured by vacancy rates. Vacancies for new homes are always higher than for old. But not by nearly seven percentage points, as they are now. In 1998 the vacancy rate on "homeowner" (or nonrental) houses built before 1990 was 1.7%, vs. 3.5.% for those built more recently. Some of the newer homes now vacant have never been occupied. Others are empty because of foreclosures. Back in the boom times, newly built homes—spacious, with high-end appliances—seemed a bargain, says Glenn Kelman, CEO of online brokerage Redfin. But many were built on cheap land in distant exurbs requiring long work commutes. Once the bust hit it became clear that "the value is in the land," says Leslie Appleton-Young, chief economist of the California Association of Realtors, "not the bricks and mortar."
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