Tight market should create more buyers in 2015
The city’s tight rental market is expected to spur even more Calgarians into becoming homebuyers in 2015.
Impacted by the same market forces that resulted in record home sales and rising prices in 2014, Calgary’s rental housing market saw its own banner of sorts last year. With the vacancy rate amongst the lowest in Canada – between one and 1.4 per cent throughout the year – Calgary rents conversely ranked as the highest in all of Canada. According to Canada Mortgage and Housing Corp. (CMHC), monthly rents for a two-bedroom unit increased by 5.9 per cent over the $1,224 seen in October of 2013 to $1,322 in 2014.
As a result of Calgary’s cramped market, many would-be renters in the city were motivated to look towards the sales market, contributing to a record year for condo sales in the city.
“Tight rental market conditions supported increased demand for housing in the city in 2014,” said CREB chief economist Ann-Marie Lurie. “Lack of rental options, rising rents and low lending rates encouraged both first-time homebuyers and investors to enter the market, notably in the condominium apartment sector.”
Yearly condominium apartment sales totaled 4,742 in 2014, an 18 per cent increase over the previous year. Townhouse sales totaled 3,737 units, a 17 per cent annual increase, marking record years of sales activity for both sectors.
Throwing a wrench into Calgary’s need for more rental housing is the ongoing debate surrounding secondary suites. While many – including Mayor Naheed Nenshi – support wider acceptance of the suites as a way of bolstering the city’s rental stock, concerns about parking and community cohesiveness have kept the issue at a standstill at City Hall.
Speaking on council’s inability to move the bar on wider acceptance of the suites, Ward 8 Coun. Evan Woolley said “We have an affordable housing crisis … if you don’t like this … then I would encourage you to come up with your own plan to add some affordable housing supply.”
Moving forward, CREB® expects increased supply from both purpose-built and the secondary condominium apartments rentals, as well as an expected drop in migration, should help increase vacancy rates, which are still predicted to stay below two per cent in 2015. However, relatively tight vacancies and rising rents will continue to support ownership demand from first-time homebuyers in the city.
“While elevated net migration has continued to support rental demand in Calgary, additions to the rental stock have resulted in a higher apartment vacancy rate. Despite the increase from 2013, the vacancy rate remained low by historical standards, resulting in continued upward pressure on rents,” said Felicia Mutheardy, CMHC senior market analyst for Calgary.