A few weeks ago, Lawrence B. Lindsey wrote,

There are 129 million housing units in the United States, comprising owner-occupied, rented, and vacant units. Of these, 18.5 million are empty. This vacancy rate is 2.5 percentage points higher than it has been at any point in the half century the data have been tracked, translating into at least 3 million too many empty housing units in the country.

Wow. At typical rates of household formation, I think it would take at least two years to fill the excess inventory, even if builders were to completely stop building new homes.

Kevin Hassett writes,

The vacancy rate for homes built before 2000 has ticked up only a smidgen, to about 2 percent. That level is about the type of inventory one would expect to see in a healthy housing market. But the vacancy rate for newer homes has skyrocketed, and now stands above 10 percent.

Builders tend to be highly leveraged. I’ve got to believe that there are some banks out there that aren’t going to get their money back on a lot of their construction loans.

On the other hand, maybe the banks already own most of the vacant properties. Maybe speculators accumulated them during the boom, and they had to unload them in the past year, when prices stopped going up. They unloaded them on the mortgage lenders, who in turn call this the “subprime mortgage” problem because the lenders want taxpayers to bail them out.