Rental Housing Markets, the Incidence and Duration of Vacancy, and the Natural Vacancy Rate

New intermetropolitan and time-series data from the BLS are used to derive and model the incidence and duration of rental vacancies and to assess their importance to the price adjustment mechanism for rental housing. Research findings indicate that duration varies with measures of MSA housing costs and housing stock heterogeneity, while incidence varies with measures of population mobility, public housing availability, and population growth. Results support a more general specification of rental price adjustment in which the rate of real rent change reflects deviations in observed vacancy incidence and duration from their equilibrium levels. The research provides new estimates of equilibrium vacancy rates for a large set of metropolitan areas over the 1987–1996 period.