Why is this important?
The vacancy rate indicates the percentage of housing units that are unoccupied or vacant, and is one of the most important measures for determining housing market conditions. The vacancy rate fluctuates with rents and sales prices in response to the relationship between demand and supply. Typically, vacancy rates will change before rents or sales prices respond, so vacancy trends are an early indicator of other housing market conditions [i].
The vacancy rate reveals trends that can vary across community scales. At a large geographic scale, like a city or regionally, very low vacancy rates cause housing prices to increase as demand surpasses supply. A low vacancy rate is one of the key indicators of a robust housing market. At a smaller geographic scale, like a neighborhood, high vacancy rates may lead to decreased property values, increased crime, diminished safety, and loss of community [ii]. Across a region, certain communities may have higher vacancy rates and therefore provide more accessible housing options. Additionally, units may be considered vacant if they are newly constructed and new owners have not moved in yet, or there is a high percentage of vacation or seasonal homes [iii].
[i] Browne, Erin. “Know Your Indicators: Vacancy Measures.” U.S. Department of Housing and Urban Development. Web 28 June 2017.
[ii] “Residential Unit Vacancy Rate.” Partnership for Sustainable Communities. Web 28 June 2017.
[iii] “Housing and Neighborhoods.” ET Index. 2017. Web 28 June 2017.