Market sees rise in vacancies, rents
Calgarians looking to find rental housing have been treated to more selection in recent months.
According to a report from Canada Mortgage and Housing Corporation (CMHC), Calgary’s vacancy rate in April stood at 3.2 per cent. The number is more than double the rate seen last April, when CMHC reported Calgary vacancies at just 1.2 per cent.
Across Alberta’s urban centres, the rental apartment vacancy rate was 3.4 per cent in April 2015 compared to 1.8 per cent in April 2014, according to the report.
“A combination of weaker economic conditions, slower migration to the province, and an increase in the supply of rental units has placed upward pressure on vacancy rates in Alberta” said CMHC regional economist Lai Sing Louie.
Unlike previous years, where a lack of new purpose-built rental inventory contributed to what Mayor Naheed Nenshi called a “crisis” in the rental sector, the addition of rental apartments, coupled with a growing secondary market, has increased availability, said Cho.
Between 2007 and 2011, less than 300 purpose-built rental apartments were added to Calgary’s housing market.
“The supply of rental units has also increased with the addition of close to 900 new apartment units,” said Cho. “Landlords are also competing with the secondary rental market, which has grown over the years. Collectively, these factors have contributed to the rise in the vacancy rate.”
Across urban centres in Alberta, vacancies either increased or remained unchanged in April. The lowest vacancy rate in Alberta was zero per cent in Canmore, according to CMHC.
Cold Lake and Wood Buffalo had the highest vacancy rates in the province at 22.8 and 22.3 per cent, respectively. Calgary had a vacancy rate of 3.2 per cent and Edmonton had a vacancy rate of 2.4 per cent.
While added vacancy has been a positive for many Calgarians, the flip side is the cost of rental accommodations in the city has also been on the rise. According to CMHC, the average rent for two-bedroom apartment in Calgary was $1,319 in April 2015, a 5.9 per cent increase over the previous year. In Alberta’s major urban centres, the average rent for a two-bedroom apartment rose 4.8 per cent.
In Edmonton, the average two-bedroom apartment rent in April 2015 was $1,250 per month – a 4.4 per cent increase from last year.
The highest rent among Alberta’s urban centres was in Wood Buffalo where an average two-bedroom apartment rented for $1,984 in April 2015.
Longtime Calgary renter Crystal Scriven said the possibility of shelling out more each month could have her seriously considering a change in living status.
“As it stands right now, I’m able to put a good amount of money away while renting and still have some leftover for fun things,” she said. “But if that were to disappear, I think I would definitely be looking to buy as soon as possible. If I were going to be house broke, it would have to at least be going toward my own mortgage.”
While sales activity has been down across nearly all price sectors in Calgary for most of 2015, the majority of transactions in May took place in the sub-$500,000 sector, a possible sign more renters are being converted into first-time buyers.
A recent report issued by Canadian Association of Accredited Mortgage Professionals (CAAMP) found first-time homebuyers are significant drivers of the current housing market, making up 45 per cent of the 620,000 homes sold in the past 27 months.
“There is intense interest in the Canadian housing market, especially from first-time buyers,” said CAAMP president and CEO Jim Murphy.
Among the reasons to purchase, 51 per cent of first-time buyers – of whom “most” were aged 25 to 34-years-old – cited the desire to “stop renting” as their top motivator. In addition, 64 per cent considered their mortgage “good debt.”