The ups and downs of rental housing markets have led policymakers, investors, and lenders to look for better ways to evaluate the risks and returns to investment in residential properties. To that end, real estate economists have drawn analogies from labor market theory to model the way prices adjust in the rental housing market. For example, labor economists have long sought to estimate the natural rate of unemployment, defined as that rate associated with long-run equilibrium in the labor market and a constant level of real wages. In a similar vein, real estate economists have defined the natural vacancy rate as that rate associated with rental market equilibrium and constant real rents. Rising real rents imply excess demand for housing and vacancy rates that are lower than their equilibrium levels, while falling real rents imply excess supply and vacancy rates that are higher than their equilibrium levels. These simple models do well in empirical studies [see, for example, Gabriel and Nothaft (1988)]; in recent years, observed vacancy rates have declined to near equilibrium levels in many metropolitan areas, suggesting higher rates of return to investors and reduced risks to multifamily lending and construction.