Estimating Natural Vacancy Rates with Unknown Break Points for the Chicago Rental Housing Market

Jian Zhou

Journal of Housing Research, 2008, vol. 17, issue 1, 61-74

Abstract: Most empirical studies of the rental adjustment process assume a temporally constant natural vacancy rate (NVR). Such an assumption lacks theoretical support. This paper presents further evidence for the inherently time-varying NVR by detecting a break point in it for the Chicago rental housing market over the 1994:Q1-2005:Q4 period. The break point occurred at 2001:Q4. Its existence can be attributed to the structural changes that the Chicago housing market, as well as the macroeconomy, went through following the 9/11 event. Given the break point, two discrete values for the NVR are estimated, one for 1994:Q1-2001:Q4 and the other for 2002:Q1-2005:Q4.

Date: 2008
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DOI: 10.1080/10835547.2008.12091987

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