Vacancy rates

What does this indicator measure?

This indicator measures the proportions of housing units that are vacant, calculated separately for rental units and owner-occupied units. This indicator reports vacancy rates for Collin County, Dallas County, Denton County, and the Dallas Primary Metropolitan Statistical Area (PMSA). The Census Bureau calculates this data, which is derived from a statistical sample called the American Communities Survey (ACS). In the future, data will be available from the American Communities Survey for all of the counties included in Dallas Indicators.

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For context, the Dallas–Fort Worth Consolidated Metropolitan Statistical Area (CMSA) vacancy rates are also compared with those of Texas and the United States as a whole. These data are also provided by the Census Bureau, but they are derived from a different statistical sample called the Current Population Survey (CPS). Because the sampling methods are different, the data at the county level is not comparable with the data for the Dallas–Fort Worth CMSA, Texas, or the United States. However, the CPS is updated more quickly than the ACS, allowing us to include more recent data for the larger geographies. The CPS does not contain data at the county level.

In calculating vacancy rates, the Census Bureau classifies as vacant all units that are vacant and available for occupancy but unrented or unsold as of the survey date. Units that are rented or sold but not yet physically occupied by the new tenant or owner are classified as occupied, as are units for sale or for rent but still occupied by the current tenant or owner. For more information on methodology and data definitions, click here. For more information on the difference between the Current Population Survey and the American Communities Survey, click here.

Why is this indicator important?

Vacancy rates are a key indicator used by economists to help identify trends and forecast future economic conditions. Typically, lower vacancy rates suggest high demand for new units, which will likely result in rising rents and sales prices as well as an increase in new construction in the future. Conversely, higher vacancy rates suggest excess capacity and will likely result in a slowdown in new construction in conjunction with a slowdown in the rate of increase of rents and sales prices. In severe cases, a high vacancy rate could result in a decrease in rents and sales prices, especially following a period of low vacancy and rapidly rising rents and sales prices.

Rental and homeowner vacancy rates can be used separately to judge trends in rental housing and owner-occupied housing. The homeowner vacancy rate is typically significantly lower than the rental vacancy rate because of the much lower turnover and higher transaction costs involved. Owners who cannot afford two mortgages at the same time will often choose to remain in their current home until it is sold, whereas rental homes are more frequently vacant for some period of time after one tenant has left and before the unit has been rented to a new tenant.

In addition to forecasting the housing market and the general economy, vacancy rates are often used in making policy decisions. The Department of Housing and Urban Development (HUD) uses rental vacancy rates as a primary factor in allocating Section 8 and block grant funds among local areas, as well as in determining how localities may utilize the funds. Economists have traditionally concluded that a rental vacancy rate of approximately 5% constitutes equilibrium in the rental housing market. However, some economists question this rule of thumb as being too rigid and not mindful of regional and historic variations. (For a discussion, click here.) Indeed, rental vacancy rates in many major metropolitan areas in the South are currently at historic highs well above 10%.

How are we doing?

The data suggest that after a long period of booming construction and rising vacancy rates accompanying the recent economic recovery, vacancy rates are beginning to stabilize in the Dallas area. In both homeowner vacancy and rental vacancy, Collin County’s rates are consistently well below the rates of Dallas and Denton County.

Rental Vacancy Rates

The rental vacancy rate for Dallas County nearly doubled between 2000 and 2003, from 7.4% to 14.6%.
In 2004, the rental vacancy rate in Dallas County leveled off at 14.5%.
Denton County experienced a doubling of its rental vacancy rate in only one year, from 6.4% in 2002 to 13.3% in 2003, followed by a plateau at 14.0% for 2004.
Collin County’s rental market experienced a more modest rise in the vacancy rate, from 9.3% in 2002 to 12.8% in 2003, followed by a sharp decline to only 6.1% in 2004.
The Dallas PMSA followed the trend of Dallas and Denton Counties, albeit with a moderated effect.
Interestingly, although Dallas County experienced steadily rising rental vacancy rates from 2000 to 2003, the Dallas–Fort Worth CMSA experienced a sharp dip in its trend in 2001.
From 2001 to 2002, the Dallas–Fort Worth CMSA rental vacancy rate nearly doubled, leveling off with a slight upward trend in 2003 through 2005.
With the marked exception of 2001, the Metroplex has had rental vacancy rates on average 2 percentage points higher than those of the nation as a whole during the past five years.
The Metroplex has had lower rental vacancy rates than Texas as a whole for the past five years.
Texas rental vacancy rates, although higher, followed a similar trend to those of the Metroplex, with a slight dip in 2001, followed by rising rental vacancy rates in 2002 and 2003, and leveling off and even declining slightly in 2004 and 2005.

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Homeowner vacancy rates in the Dallas area did not follow the same trend as rental vacancy rates. While remaining steady at 1.2% in 2000 and 2001, homeowner vacancy rates then spiked in 2002 to 3.3%, followed by a marked decline in 2003 to 2.1% and a small increase in 2004 to 2.3%.

Collin and Denton Counties also showed higher homeowner vacancy rates in 2002 (1.8% and 3.1%, respectively), followed by a sharp decline in 2003 (1.0% and 2.2%).
While Dallas County showed a moderate increase in homeowner vacancy rates in 2004, Collin County had a homeowner vacancy rate of 1.6% in 2004, and Denton County’s rate was 2.9%—both similar to their respective 2002 levels.
Homeowner vacancy rates in the Dallas–Fort Worth CMSA were more volatile than those of Texas and the United States, experiencing a sharp spike in 2001 and a sharp drop in 2002, before increasing again in 2003 and stabilizing in 2004 and 2005.
In 2005, homeowner vacancy rates in the Dallas–Fort Worth CMSA were approximately half of a percentage point higher than the U.S. rate, but half of a percentage point lower than the Texas rate.

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Vacancy Rates
RENTAL
	2002	2003	2004	2005
Dallas County	10.1	14.6	14.5	12.3
Collin County	9.3	12.8	6.1	8.2
Denton County	6.4	13.3	14	9.2
City of Dallas	9.8	14.4	15.6	12.8
Texas	9.7	11.6	11.9	10.6
USA	7.1	8	8.1	7.7
HOMEOWNER
	2003	2003	2003	2003
Dallas County	2.1	2.1	2.1	2.1
Collin County	1	1	1	1
Denton County	2.2	2.2	2.2	2.2
City of Dallas	3.1	3.1	3.1	3.1
Texas	2	2	2	2
USA	1.7	1.7	1.7	1.7