High Vacancy & Rising Construction

[Cole Baker]

Hello Bigger Pocket Community, 

I am going through the process of choosing a market. One thing I have run into is a major market that has rising 5-year vacancy rates, and rising YoY permitted units. 

Why is it a bad sign that vacancies are increasing consistently over the last 5-years and construction permits are increasing YoY? 

Does this mean the market is too saturated? And should I stay away from the market? 

Are there other factors that I should consider that would encourage me to pursue this specific market? 

Thank you all in advance for the help!

[Scott E.]

More units being built in a market with rising vacancies should lead to the vacancy rate rising even more drastically over the next 5 years.

Look at migration data for your market. That'll help tell the story.

In my market population has been growing ~1.5%-2% for the past 10 years. This means more people are moving here than there are people leaving here (and dying). And this has caused low vacancies and rising real estate prices.