What is a vacancy rate
“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.
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.”