What is a vacancy rate

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about what is a vacancy rate.

Sometimes you may hear the media quote vacancy rates.

Only to pretend like you know what’s going on.

Oohh that sounds like a good rate!

Thinking to yourself this is to complicated to understand.

But in reality they are actually quit straight forward.

Simply, the vacancy rate is a percentage of properties.

Which are unrented for longer than 3 weeks against the total number of rental properties in the market.

For example.

There are 5 properties on the rental market for longer than 3 weeks.

There are 100 total properties in the rental market.

In this case the vacancy rate would be 5%.

i.e. 5 as a percentage of 100 properties in the market.

What’s also important to know is a market is generally considered in equilibrium.

When rates are at 3%.

When they are below 2% the market is considered to have too few rental properties available.

Under 1% is a critical shortage, which can put upward pressure on rents.

Based on supply and demand.

So now when you hear someone in the media say the area has a rate of 4.2%.

You know you should probably be wary of investing there.”