Month after month the reports come in and month after month Calgary is still holding at a bleak one per cent rental vacancy.
In a report released by CIBC World Markets Inc., Calgary was shown to have the lowest rental vacancy rate out of the major city markets in Canada.
Entitled If You Build It, Will They Come?, the report showed Alberta renters as a whole are experiencing a difficult time, with Calgary and Edmonton at one and 1.4 per cent rental vacancy, respectively. Other Canadian cities ranged between 1.7 per cent and 6.1 per cent. Saint John, New Brunswick has the largest rental vacancy rate at 11.4 per cent.
“The published rates are about one per cent, and that’s accurate, but that’s for property that’s built purposely for rentals,” said Shamon Kureshi, president and managing broker of Hope Street Real Estate Corp.
Currently Hope Street Real Estate Corp. has 987 people waiting to find a home to rent, while they only have 77 listings available.
Kureshi said the number of listings is the lowest they’ve had in the past six to eight months, and it is seasonal, because people do not like to move in the winter months.
Kureshi did add that the public can’t rely solely on the one per cent vacancy rate, because most of the academic stats come from only properties which are purpose-built rentals, and not other rentals like basement suites. However, Hope Street focuses on offering larger homes for rent, rather than apartments or basement suites.
“We focus on family homes and executive level homes, so our average rents might be in the neighbourhood of $2,000 to $3,000, so it is very different from your average rental apartment, where you can get a one bedroom for about $1,100 or a two bedroom for $1,300,” said Kureshi.
While Hope Street tends to cater to the higher end of the rental spectrum, Kureshi said he’s still heard plenty of stories about families having to compromise on their criteria.
“It is not uncommon for us to get feedback from our renters, in saying that they settled so to speak. Originally they were hoping for 3,000 sq. ft. on the west side of town and instead they settled on 2,000 sq. ft. in the north suburbs.”
Driven by a steadily increasing number of new Calgarians, the rush to rent in the city has driven prices upwards faster than in other Canadian markets. The strong inflow of interprovincial and international migrants into the province is the primary driver of the low vacancy rate in Alberta’s two major cities. Strong population growth benefits the general economy—boosting retail sales and personal services— but it puts pressure on the rental accommodation market. Typically, migrants rent before they decide to purchase a residential property.
According to Canada Mortgage and Housing Corporation, the average two-bedroom rent in Calgary was $1,224 in October 2013. The highest average two-bedroom rents were reported in the Downtown and Beltline, averaging $1,357 and $1,287 per month in October 2013, respectively.
“The negative relationship between vacancy rates and rent inflation is unmistakable, with rent rising by an average year-over-year rate of close to six per cent in tight markets—three times faster than seen in soft markets,” said Benjamin Tal, deputy chief economist of CIBC World Markets Inc.
The demand for rental housing in Calgary has also been evident with other agencies. Attainable Homes Calgary Corporation (AHCC) assists Calgarians with the process of purchasing a home, supporting eligible households earning up to $80,000 annually by delivering quality entrylevel homes at attainable prices as well as providing gifted down payments.
President and CEO of AHCC, David Watson said, “Last year we experienced a dramatic increase in the number of people exploring the idea of buying an attainable home, rather than renting, and the demand has continued into 2014.”
About 1,000 families have registered on AHCC’s website, and over 230 of those families have spent time completing the home education session, explained Watson. “Many of our homeowners were able to purchase a home and start building equity for the same cost or less than renting.”
“Many of our homebuyers said they were tired of rent increases and moving around,” said Watson. “In a market of rising rents, the stability of ownership and the opportunity to build equity becomes more attractive.”
CREB® recently launched a service that will help Calgary renters in their search. Bringing the Calgary board in line with many cities across Canada and the U.S. that offer similar services, CREB®Now shows residential rental listings on the MLS® system, easing some of the burden for would-be tenants and owners.
“Calgary is facing a limited rental market, and the opportunity exists to offer another service to consumers using the trusted and well known resource of the MLS® system,” said CREB® President Bill Kirk. “By making this option available, CREB® is demonstrating its commitment to being the essential real estate resource for consumers.”