For stratification models, what does the Vacancy Ratio formula (V/GI) account for?

The Vacancy Ratio formula, represented as V/GI, specifically accounts for property vacancy. In this formula, 'V' stands for the total potential rental income lost due to vacant space within a property, while 'GI' represents the Gross Income. The Vacancy Ratio is a crucial metric in assessing the financial performance of income-producing properties, as it provides insights into the proportion of the property that is unoccupied and, therefore, not generating income.

Understanding the vacancy ratio is essential in mass appraising because it helps to adjust valuations based on actual income potential, considering that higher vacancy rates can significantly affect a property’s market value. For appraisers, including the vacancy ratio in stratification models ensures that different segments of the property market are evaluated with this critical factor in mind, leading to more accurate assessments. This focus on property vacancy distinguishes this option as the correct answer.