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What are Vacancy Rates?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 19 September 2016
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Vacancy rates are statistics kept on vacancies in rental properties, homes for sale, and hotels. High vacancy rates are usually viewed as a sign that the market is struggling, while low rates are desirable, because they indicate that property is a hot commodity and that vacancies rarely remain unfilled for very long. Statistics on vacancy rates are kept by many government agencies and companies which specialize in economic analysis, and they can be useful to consider when people are relocating to a community.

In the sense of housing, a vacancy rate counts up the total number of livable but unoccupied units, and determines what percentage of the total available housing is vacant. Vacancy rates include homes, apartments, and other living arrangements. The lower the vacancy rate, the more challenging it is for people to find housing, because units they are interested in may not come up for rent or sale very often.

High vacancy rates in housing usually suggest economic depression. They can occur when lots of people move out of a community, leaving large numbers of homes vacant, and when developers overestimate the market for housing in a community. High rents can also drive up the vacancy rate, as people may not be able to afford to rent, instead making other arrangements. Hotel vacancy rates can be even stronger indicators, as lots of vacancies mean that less money is coming into the community.

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Individual statistics are often kept for different types of housing, distinguishing between apartments, townhouses, single family dwellings, and so forth. Landlords usually need to keep up with the latest information, as fluctuations can influence the amount of rent they can charge. Landlords may also struggle with an unusually high vacancy rate for their own properties, often paired with high turnover, in which tenants are constantly coming and going.

Commercial vacancy rates are also an important economic indicator, and they are usually calculated separately than residential rates. These rates can include empty retail businesses as well as other commercial buildings such as warehouses and factories. Low rates are desirable, especially because people are less prone to spending money in business districts with high vacancy rates. Psychologically, a row of empty storefronts can have a very chilling effect on consumers, even if the economy is actually robust.

People who are interested in getting statistics on vacancy rates in a specific community can try consulting census data and local government offices. Realtors are also fond of keeping statistics on vacancies, as are websites which provide demographic data about various communities.

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andee
Post 4

One thing I have found interesting is that apartment vacancy rates have seemed to increase while other areas of real estate of decreased.

I think the reason for this is many people have not been able to afford their home any longer and they have moved into an apartment. While many homes and town homes sit empty without any qualified buyers, the apartment industry has grown.

There are some apartments in my area where you have to be on a waiting list to get in. These are the places where many people would choose to live first. This also means they can charge higher rates because they know people will pay it to stay there.

Another apartment owner on a different side of town may have to charge a higher rate just to make up for all the empty units they have available.

John57
Post 3

I think that vacancy rates comes down to supply and demand. If there is a large demand for something, you will be able to charge a higher rate than you could if there is a large supply.

Where I live there is an over abundance of town homes available and you could buy one pretty cheap if you wanted to. Many people have had a hard time selling these so they are willing to rent them out.

Since there are so many of them available, even the rent for these homes can be pretty cheap compared to what it was a few years ago. The amount an owner can charge for a rate is usually pretty competitive with what others around them are charging.

sunshined
Post 2

I live in the suburbs close to a metropolitan city and many of the strip malls around where I live have a lot of vacant buildings. In some of these places there may be room for up to 20 different businesses and only a handful of them are occupied.

I don't think it is so much a matter of a high rate as it is the bad economy. Many people don't have extra money to spend out shopping, so it makes it hard for a small business like this to stay profitable.

Not only is this hard on the business paying the rate, but also on the owner of the building. If they can't get renters for their

open spaces, they also have a hard time making the building payments.

If they raise their rates too high, they won't attract any business owners, but if they have the rates too low, they will have a hard time making ends meet too.

myharley
Post 1

When I see a hotel that has a sign saying "no vacancy," I know it is either a popular spot or there is something special happening in the town.

Very seldom have I ever run into a problem getting a hotel room unless there was a lot of other competition in town for a special event.

My sister lives in Phoenix and one year I was planning to visit her and didn't realize a special football bowl game was going on at the same time. It was hard to find a hotel within certain sections of the city and many of the nicer hotels didn't have any vacancy.

Of course because of that, the price I would have paid for a room was at least twice as much as it normally would have been. While this is good for the hotel owners, it is not so great for those who have to spend the money for it.

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