32 N oĢ 414 Hagen and Hansen variations in the natural rate across both space and time. Since then, a number of studies have focused on JRER Vol. Empirical support for the existence of a natural vacancy rate in rental housing dates back to Smith (1974). In that case, information on natural vacancy rates is made more useful if available at the submarket level. If submarkets exist, it is possible that natural vacancy rates will vary by submarket. In the case of a rental market, there may be separate submarkets for different apartment types (onebedroom, two-bedroom, etc.), and for different geographic locations.
Vacancy home for sales and economic impact series#
Housing markets are often modeled as a series of separate but related submarkets, with differing supply and demand conditions in each. If the natural vacancy rate declines over time, the return on rental property investment will rise, ceteris paribus. In long-run equilibrium, the lower the natural vacancy rate, the greater the amount of rent generated by a given rental property, everything else held constant. In addition to its effect on the movement of rents, the level of the natural vacancy rate has direct implications for the return on property investment. Comparing the natural rate at a point in time to the actual vacancy rate provides some indication of future rent movements in that market. Beyond that, however, estimates of the natural vacancy rate for a rental housing market provide information that is potentially useful for investors, lenders, and other real estate professionals. One reason to estimate natural vacancy rates is to confirm this hypothesis. According to the natural rate hypothesis, fluctuations in apartment rents are driven by deviations in the vacancy rate from equilibrium or natural levels.
/aerial-view-of-house-roofs-in-suburban-neighborhood-565976173-5b185a148e1b6e0036d465ef.jpg "vacancy home for sales and economic impact")
No significant differences in the natural vacancy rate are found for different apartment types. Results also show significant differences in natural vacancy rates for different geographic subareas. Results show a decline in the natural vacancy rate in the time period following the introduction and growth of the Web. Findings support the existence of a natural vacancy rate for apartments that varies over time, and in some cases across apartment submarkets. Hansen Abstract This study uses data for the Seattle metropolitan area to test the natural vacancy rate hypothesis for rental housing markets using a new methodology. 1 Rental Housing and the Natural Vacancy Rate Authors Daniel A.
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