Boston is “a seller’s market.” It’s an urban landscape characterized by high rents, high income inequality and low rental vacancy rates, according to Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy.

In other words, Boston’s rental housing market is destabilizing again.

About 3.4 percent of apartments in Boston-Cambridge-Newton were empty in 2015, according to data published by the United States Census Bureau. Bluestone, also a professor of the political economy at Northeastern University, argues that a healthy percentage is double that – between 6 and 7 percent. Rents will continue to rise under this vacancy rate, Bluestone said, but it will climb “no faster than normal inflation, which is by 2 – 3 percent each year.”

Boston’s low vacancy rate intersects with several of the city’s issues, including gentrification and homelessness. Half of the city’s residents makes less than $35,000 annually and yet the fair market rate for a two-bedroom apartment in Boston is $1,454 monthly ($17,448 annually), according to the U.S. Department of Housing and Urban Development.

“The vacancy rate is the critical index of what will happen to rent and prices,” Bluestone said. “Landlords can raise their rents in a market where you have extremely low vacancy rates, and that’s what we’ve seen happen in Boston.”

Fair Market Rent (FMR) for a two-bedroom in Boston increased by 18 percent between 2005 and 2015. This data was taken from the annual FMR database provided by the U.S. Department of Housing & Urban Development (HUD).

Fair Market Rent (FMR) for a two-bedroom in Boston increased by 18 percent between 2005 and 2015. This data was taken from the annual FMR database provided by the U.S. Department of Housing & Urban Development (HUD).

Looking at these two line graphs, rent increased overall between 2005 and 2015. Meanwhile, average vacancy rate decreased and only years 2009, 2010 and 2013 had vacancy rates between 6 and 7 percent – the ideal number.

The green bar indicates a healthy vacancy rate, which is between 6 and 7 percent. Data from the Department of Housing and Urban Development.

The green bar indicates a healthy vacancy rate, which is between 6 and 7 percent. Data from the Department of Housing and Urban Development.

On a national scale, the city’s number of available apartments ranks low – it’s tied with metro New York City for the third lowest (or worst) vacancy late, according to a 2014 study by the NYU Furman Center. To put this into context, the study states that more than 50 percent of Boston residents live in a rented space month to month.

Jason Pan, the owner of Midtown Properties and a longtime landlord, said that the city’s population increased while the number of rental spaces remained stagnant – a combination of factors that not only affect vacancy rate, but market rate rent. The U.S. Census likewise indicates that Boston’s population grew by 7.6 percent since 2005.

“More and more people need housing. There’s more competition among the tenants,” Pan said. “It’s pressure – people are willing to pay more for the limited housing stock.”

Essentially, vacancy rates are a matter of supply and demand for major U.S. cities. But the good news is that some experts and real estate industry observers predict a higher vacancy rate to come, meaning that the growth of fair market rents will eventually slow down. The real estate market watchdog group Ten-X still projects that current construction projects will eventually increase the supply of available housing, lowering the vacancy rate. The group estimates that the price of two-bedrooms in 2019 will cap off at around $2,260 monthly ($27,120 annually)  – but that’s still a 51 increase from the current price. If families were to pay no more than 30 percent of their income to the projected 2019 rent, they would need to make more than $80,000 each year.

“A large percent of the population has an income of under $35,000, who are just being priced out of the market,” Bluestone said. “The only true answer is to build as many new [housing] units as possible.”

Bluestone estimated that the city would need about 310,000 – 440,000 new units by 2040 for the housing market to stabilize. And in short, if you want to know how your city is performing in areas of housing and affordability, a quick way is to look at its vacancy rate.