Rental Housing Markets and the Natural Vacancy Rate

This paper employs new census vacancy rate data to analyze the price‐adjustment mechanism for rental housing. The study extends previous research on this topic, which provided conflicting evidence concerning the traditional theory of rental housing market adjustment (see Smith [10] , [11] ; DeLeeuw and Ekanem [2] ; Eubank and Sirmans [4] ; and Rosen and Smith [8] ). Cross‐section and time‐series data are pooled to estimate natural vacancy rates for sixteen United States cities for the 1981–85 period. The analysis further explores the determinants of variation in natural vacancy rates across those metropolitan areas.