Wait, What Is Going On With Rental Vacancies?

Its tight, but its been a lot tighter for a lot longer

May 7th, 2024 - Volume 10 (2024), Missive 104 (Tuesday)

• Vacancies Are Not That Low

• Residential Lessors Are Showing Signs Of Pain

• PCE & CPI Are Grossly Overstate By Overstated Rental Prices

Six and one half of one percent.

It is a bit of an unusual percent but 6.5 percent does have some historical context when it comes to the rate of rental vacancies in this economy. As it is, a 6.5 percent rental vacancy rate looks to be at the top end of the lowest range that the rate will work through. For example, after falling below 6.5 percent in late 1967, the rental vacancy operated within a range of 5.0 to 6.5 percent for the next almost 20 years before cresting back above 6.5 percent and going higher from there. After bouncing off of that 6.5 percent level here in more recent times, the rental vacancy rate did break below it just before the pandemic and, after a knee-jerk reaction, has stayed mostly below it ever since. However, according to the latest quarterly data from the Commerce Department, the rate was at 6.6 percent last quarter. More so, by the looks of it, while tight, this rental market even these past few years certainly doesn’t compare to the 1960s-1980s stagflationary era. In fact, it appears that it rent isn’t anywhere as near a problem as it is made out to be.

Rental vacancies aren’t all that low.

Confirming this general malaise in rent, or at least it not living up to the current narrative bill, was last month’s employment report. More specifically when it comes to being busy in the lessor of real estate space, lessors of residential buildings and dwelling actually saw work contract in March while all other lessors (nonresidential buildings, miniwarehouses, and others) continued to plug along. Given that billable work hours tends to directly come down to rent being paid, it is pretty clear that