What was cause of High Multifamily Vacancies during 2009

[MARK F.]

Here is the multifamily vacancy chart from data gathered and reported by the NAHB.

*in case chart doesn't display you can find it here...

http://www.nahb.org/generic.aspx?sectionID=238&genericContentID=149100

it is downloadable in an excel spreadsheet

The Multifamily Vacancy Index (MVI) measures multifamily housing industry's perception of vacancies on a scale of 1 - 100. Any reading above 50 would indicate increasing vacancies, likewise any reading below 50 would indicate declining vacancies. The MFI peaked in 2009 with a reading of 70.2 and has been falling like a rock ever since. For comparison Q3 2011 reading was 35.1.

I have just begun studying the multifamily industry and I would speculate the wave of foreclosures during the last recession would have forced people out of their homes and into rentals i.e. multifamily units.

According to the chart multifamily vacancies rose to a high level during the recession, and peaked in 2009.

Why?

[Jonathan Twombly]

Originally posted by @Joe Splitrock:

Originally posted by @Brian Hamel:

I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.

Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up. 

So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009. 

I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.

Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years.  No doubt it is coming.

Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.

http://static1.businessinsider.com/image/58593bf2c...

https://en.wikipedia.org/wiki/Hybrid_electric_vehi...

 You know what the tipping point for self-driving vehicles will be?  When insurance companies have collected enough data to be confident in offering lower insurance rates for self-driving cars than human-driven ones.  Almost all accidents are caused by human error.  So, one day, if you are going to drive your own car, you are going to have to take out a very, very expensive liability policy for the privilege of doing so.  At some point, only the very rich will be able to drive their own cars - if they want to.  

Anyway, who would want to?  I'd rather climb into the car at night, get a good night's sleep, and arrive at my destination (loser:  the hotel industry and AirBnB), or be able to work for the entire ride while my car drives itself.

Of course, since "driver" is the single biggest job category in the US, our economy will nose-dive when autonomous vehicles take over . . .