A survey of competing residential rental units on one date finds 36 vacant units out of 900 total units. What is the vacancy rate, expressed as a ratio?
Correct Answer
A) 0.04
Vacancy fraction=36 vacant units/900 total units=0.04. This is the numerical result for this inventory and date, not an automatic market-condition or property-value conclusion. Common errors: computing occupied units/total units=864/900 gives 0.96; inverting the ratio (900/36) gives 25.00; reporting the percentage (36/900×100) as the ratio gives 4.00.
Why This Is the Correct Answer
Option A is correct because vacancy rate is vacant units divided by total units: 36 / 900 = 0.04. That ratio is the same as a 4% vacancy rate. It is a numerical result for this inventory and date, not by itself a conclusion about market conditions or value.
Why the Other Options Are Wrong
Option B: 0.96
Option B, 0.96, is the occupancy rate: (900 - 36) / 900 = 864 / 900 = 0.96. The question asks for vacancy, which is 36 / 900 = 0.04.
Option C: 25.00
Option C, 25.00, inverts the division: 900 / 36 = 25. A vacancy share is a part of the whole and cannot exceed 1; the correct calculation is 36 / 900 = 0.04.
Option D: 4.00
Option D, 4.00, multiplies by 100 and reports the percentage as if it were the ratio: 36 / 900 × 100 = 4. The vacancy rate is 4%, which as a ratio is 0.04.
Empty over everything
Vacancy rate is the empty units over all the units, so it is a fraction between 0 and 1.
How to use: Use this to set up the division and to reject any vacancy ratio greater than 1.
Exam Tip
Check that a vacancy ratio is between 0 and 1, and that you computed the empty share rather than the occupied share.
Common Mistakes to Avoid
- -Computing the occupancy rate instead of the vacancy rate
- -Dividing total units by vacant units
- -Reporting a percentage figure as the decimal ratio
Concept Deep Dive
Analysis
This question tests a basic vacancy rate calculation. Vacancy rate equals vacant units divided by total units in the same competitive inventory at the same date. With 36 vacant out of 900 total units, the ratio is 36 / 900 = 0.04, and the distractors come from computing occupancy, inverting the ratio or leaving the result in percent.
Background Knowledge
Physical vacancy measures the share of units in an inventory that are unoccupied at a given time. The numerator and denominator must come from the same competitive inventory and the same date to be meaningful. Vacancy and occupancy are complements, so the two shares add to 1.
Real-World Application
An appraiser surveys a submarket of competing apartment complexes and counts 36 vacant units out of 900 on the survey date. The resulting 4% vacancy rate is compared with prior surveys and the subject's own rent roll to support the vacancy allowance in the income approach.
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