Rental va­cancy rate in Cal­gary falls year over year

Calgary Sun - Homes - - Homes - Myke Thomas CALGARYSUN

The rental hous­ing mar­ket in the Cal­gary cen­sus metropoli­tan area (CMA) looked very dif­fer­ent in Oc­to­ber 2018 than it did in Oc­to­ber 2017, show­ing a year-over-year de­cline in over­all va­cancy rates in the pri­mary rental mar­ket f rom 6.3 per­cent to 3.9 per­cent, ac­cord­ing to the an­nual Rental Mar­ket Re­port from Canada Mort­gage and Hous­ing Corp. (CMHC).

The de­cline comes de­spite an in­crease in the rental sup­ply and can be at­trib­uted for the most part to new ar­rivals to the CMA.

“A resur­gence of mi­gra­tion, par­tic­u­larly f rom in­ter­provin­cial sources, has in­creased the de­mand for rental units, re­sult­ing in sig­nif­i­cantly lower va­cancy rates and ris­ing rents in Cal­gary,” says James Cuddy, se­nior an­a­lyst, eco­nomics at CMHC. “This is the sec­ond con­sec­u­tive year of de­clin­ing va­cancy rates, rep­re­sent­ing a sig­nif­i­cant tight­en­ing of the rental mar­ket. Sup­ply in the pri­mary rental mar­ket con­tin­ued to post strong gains in 2018, grow­ing by 3.7 per­cent.”

In the re­port, Cuddy says the pur­pose-built rental apart­ment uni­verse in­creased by 1,407 units from 38,160 in Oc­to­ber 2017 to 39,567 in Oc­to­ber 2018, how­ever, “de­mand out­paced sup­ply whereby 2,268 ad­di­tional units were oc­cu­pied in Oc­to­ber 2018 com­pared to last year.”

From Jan­uary to Oc­to­ber, 8,200 jobs were added to the Cal­gary CMA, an in­crease of one per­cent from the same pe­riod in 2017, says Cuddy.

“By this time last year, em­ploy­ment had in­creased by 3.6 per­cent year over year. Un­like last year, how­ever, the bulk of em­ploy­ment gains came from the goods-pro­duc­ing sec­tor,” he says. “Cal­gary’s el­e­vated un­em­ploy­ment rate may also be de­lay­ing the move­ment from rental to home­own­er­ship.”

It’s an ob­ser­va­tion shared by Corinne Lyall, bro­ker and owner, with Royal LeP­age Benchmark in the city.

“Those who are un­able to pur- chase prop­erty, or fac­ing em­ploy­ment chal­lenges, are choos­ing to re nt in­stead of buy,” says Lyall. “As well, we’ve had some in­creased mi­gra­tion this past year and a half where gen­er­ally you will see peo­ple con­sider rent­ing and get- ting set­tled in the city and the job mar­ket be­fore they buy.”

In­vestor-owned con­do­minium apart­ment rental units also posted strong gains, says Cuddy.

“The uni­verse in­creased by 6.7 per­cent from 21,753 units in Oc­to­ber 2017 to 23,216 units in Oc­to­ber 2018. De­mand for con­do­minium rental units con­tin­ued to grow as the num­ber of va­cant units de­clined year over year de­spite in­creased sup­ply, push­ing the va­cancy rate down to 2.7 per­cent,” he says. “No­tably, 35.3 per­cent of con­do­minium apart­ments were rented, up 1.3 per­cent­age points from Oc­to­ber 2017.

“While the in­creased preva­lence of con­do­minium apart­ment rentals com­petes with the pur­pose-built rental units, both mar­kets have tight­ened sig­nif­i­cantly de­spite strong sup­ply growth in both seg­ments.”

Com­pe­ti­tion aside, apart­ment rental rates in­creased af­ter two con­sec­u­tive years of de­cline.

“Same-sam­ple rents for two-bed­room units in­creased 1.5 per­cent year over year in Oc­to­ber 2018 com­pared to a de­cline of one per­cent in Oc­to­ber 2017,” says Cuddy. “The av­er­age two-bed­room rent, ac­count­ing for both new and ex­ist­ing struc­tures, was $1,272 in Oc­to­ber 2018, com­pared to $1,247 in Oc­to­ber 2017.”

POSTMEDIAFILEPHOTO

A resur­gence of mi­gra­tion to Cal­gary has in­creased the de­mand for rental units, re­sult­ing in lower va­cancy rates and ris­ing rents.

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