Frictional vacancy in a rental market refers to:
Correct Answer
C) The normal vacancy from tenants moving between units
Why this is correct: Frictional vacancy is the normal, unavoidable vacancy in a healthy market resulting from the time lag between one tenant moving out and another moving in. It is the baseline used in stabilized income projections, as the explanation indicates. Why the other choices are wrong: It is not units held off market intentionally (that's withheld inventory). It is not vacancy caused by disrepair (that's physical or economic obsolescence). It is not vacancy from a recession (that's economic vacancy indicating oversupply). Exam tip: Frictional vacancy = healthy market turnover. It's the floor below which vacancy indicates a shortage.
Why This Is the Correct Answer
Why this is correct: Frictional vacancy is the normal, unavoidable vacancy in a healthy market resulting from the time lag between one tenant moving out and another moving in. It is the baseline used in stabilized income projections, as the explanation indicates. Why the other choices are wrong: It is not units held off market intentionally (that's withheld inventory). It is not vacancy caused by disrepair (that's physical or economic obsolescence). It is not vacancy from a recession (that's economic vacancy indicating oversupply). Exam tip: Frictional vacancy = healthy market turnover. It's the floor below which vacancy indicates a shortage.
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Absorption rate expressed in units per month is calculated by:
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