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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.