You are reading: Average Vacancy Rates and How to Improve Them
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Landlords and property managers are often worried about their vacancy percentages because, ultimately, it impacts their profitability. Understanding what’s typical for their geographic area and the industry can help them and provide some reassurance as they seek prospective tenants.
Vacancy rates can vary significantly depending on the location, economic conditions, and market demand. For example, while a normal vacancy rate in a highly competitive urban city might be about 5-7%, a suburban community may have a higher average rate of approximately 10%.
In this blog, we’ll cover everything you need to know about average rental vacancy rates, from understanding what they are, how they’re calculated, and current statistics and trends to determine a “good” vacancy rate and how to improve these rates.
By knowing the average rental vacancy rates specific to their city and state, property managers can judge the performance of their units and properties and pinpoint areas they can improve.
National Average Rental Vacancy Rate and Other Interesting Stats
A property’s vacancy rate indicates the time that the property is left vacant, typically over one year. The vacancy rate, usually a percentage, is impacted by factors like rent price, repairs, and renovations. Any repairs done to the property between renters also affect the vacancy rate and drive it up if the unit is unoccupied during the renovation period.
For most of the last ten years, the national average rental vacancy rate has steadily declined. Here are some interesting statistics:
- According to the U.S. Census, national vacancy rates in 2023 Q2 were 6.3% for rental housing, up 8.62% from 2022 (the rental vacancy rate in 2022 Q2 was 5.6%)
- 6.35% of habitable rental units are vacant in the U.S.
- 42.6% of vacant units have been empty for less than two months
- The rental vacancy rate in principal cities is 7.1%, up 22.4% year-over-year (YoY)
- In the average suburban town, the rental vacancy rate is 5.4%, up 3.85% YoY
Rental Vacancy Rates by State
Rental vacancy rates vary from state to state, primarily based on the real estate market in each location. Here’s a spotlight on the latest rental vacancy rates across the nation:
District of Columbia 8.5%
New Hampshire 6.6%
New Jersey 2.2%
New Mexico 5.2%
New York 4.8%
North Carolina 8.1%
North Dakota 10%
Rhode Island 4.5%
South Carolina 8.5%
South Dakota 5.3%
West Virginia 5.4%
The above statistics suggest a few trends. Recent 2023 U.S. Census Bureau data reveals that the rental vacancy rate was highest in the South (7.8%), followed by the Midwest (6.9%), the West (5%), and the Northeast (4.%).
According to industry experts, this is due mainly to the fact that the South and the Midwest have declining populations. In contrast, it’s the opposite scenario in the Northeast and the West. Why is this the case? In general, a decline in population correlates to a decrease in demand for housing and, therefore, higher vacancy rates. And, of course, an organically increased population leads to the opposite outcome.
The data also indicate that perhaps those U.S. residents who fled to the suburbs or country from big cities as a result of the COVID-19 pandemic may be returning.
Cities With the Lowest Rental Vacancy Rates
The top 3 places with the best rental vacancy rates in the U.S. include:
- Minneapolis, MN
- Austin, TX
- Washington, DC
Cities With the Highest Rental Vacancy Rates
The top 3 places with the worst rental vacancy rates in the nation are:
- New Orleans, LA
- Miami, FL
- Tampa, FL
How to Improve Your Rental Vacancy Rates
Property managers can employ various marketing strategies, such as offering competitive rental prices, optimizing property listings, and leveraging various tools and advertising platforms to improve rental vacancy rates.
For example, when it comes to pricing, landlords must do their homework and research their geographic area and the rental prices in it to see how their rent price compares to others in the same location. High rental prices will obviously not lure as many prospects, and the ones that did sign a lease may only last for a little while if they find a better opportunity elsewhere.
Maintaining and improving a property’s charm and appeal by keeping up to date with basic maintenance issues, delivering top-notch customer service, and enhancing or upgrading property amenities and features are also essential. Think about it: attracting renters is easier when some perks and incentives are offered. These perks can come in the form of offering paid parking, paying for certain utilities, and more. They are always worth it to boost the chances of keeping stable renters.
It’s also a smart strategy to cultivate solid tenant relationships and foster a sense of community to retain tenants and reduce vacancies.
Landlords and Property Managers: It’s Time to Get Proactive
When landlords and property managers proactively monitor average rental vacancy rates, they can better understand the housing market’s dynamics. These critical insights can help identify trends in the market, inform pricing decisions, and ultimately lead to more profitable rental endeavors.