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Natural Vacancy Rate
The natural vacancy rate is the average percentage of rental properties that are not occupied with tenants when there is balance in demand and supply.
This figure is usually used as a benchmark to compare historical or current vacancy rates against so as to have a general idea of market sentiments.
By dividing the number of units vacant with the total units of rental units, one would be able to calculate vacancy rate.
However, the calculation have it’s limitations as a house can have 3 rooms for rent but only one is being leased.
The same can be said of multi-family property.
For such properties, the researcher has be clear on his objectives of running the calculation and adjust the equation or the data accordingly.