We had net outmigration last time around. More people leaving the area than coming in. Those weren’t necessarily all homeowners but the folks who left were living here somewhere. Besides, the number of vacant homes at any one time probably won’t be that large. If prices are reduced enough, like down close to rental levels, there will eventually be buyers – and occupants – for those homes.
We did have more rental units at that time, there being a big boom in apartment construction in run-up of the mid-80s. A lot of the apartment units have since been condo-ized, but they’re still there and they can still be rented or re-sold even if at lower prices.
Of course, I say all this within the context of what happened last time when the run up was maybe 25% of what it has done this time. I suppose it could be argued that our exposure this time around is much larger just because of the higher percentage of people who are overextended.
By the way, when there are a lot of vacant apartment units, the property managers offer rent concessions like first month’s rent free and installment plans on deposits. There are rent concessions being offered on apartment units here in SD County right now – that’s been going on in some areas for the last year or so. The lack of a deposit will not necessarily mean a trip to homelessness. Also, there may be some investor types who will offer walking money to owners while they’re still in the foreclosure process. Buying pre-foreclosures is one of the “wealth building systems” that are constantly being hawked by the late-nite infomercial crowd. Those techniques actually work during certain points of an economic cycle, but the mortgage payments have to make some sense compared to the rental rates before that happens.