For tenants the news is welcome but for landlords the latest residential vacancy rates for Canada could spell the end of a bull market.
Vacancy rates in some Canadian cities have nearly doubled in the past year and analysts say they are actually much higher than the official numbers suggest.
The average rental apartment vacancy rate in Canada’s 28 metropolitan areas rose to 2.2 percent in October 2003 from 1.7 percent a year ago, according to the Rental Market Survey released by Canada Mortgage and Housing Corp. This marked the second consecutive annual increase in the vacancy rate.
“The rise in the vacancy rate over the past year reflects a number of factors,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre in Ottawa. “Foremost among these are low mortgage rates, which reduced mortgage carrying costs and lessened demand for rental housing by bringing home ownership within the reach of many renter households. Vacancy rates also rose because rental apartment completions added new rental supply in many centres.”
The CMHC annual rental survey, however, does not count all the rental vacancies. For instance, privately owned condominiums that are on the rental market, rental suites in private houses and even some small apartment buildings aren’t surveyed.
In Vancouver, where the official vacancy rate is 2 percent, according to CMHC, it is actually closer to 4 percent, according to real estate analyst Ozzie Jurock (www.jurock.com). Jurock explains that a large number of condominiums, perhaps as high as 40 percent bought in the past two years, are now on the rental market. The same is true in Toronto, he added, where there has been a two-year surge in people buying condos for a rental investment.
Jurock’s advice to landlords: “Be nice to your tenants.”
Apartment sales specialist David Goodman, publisher of the Goodman Report on the Vancouver rental market, encouraged landlords to upgrade their property to meet the stiffer competition in the market.
For tenants seeking less costly rentals, the lower vacancy numbers may not translate into immediate savings, CMHC cautions.
“Nationally, vacancy rates have increased across the range of rent levels in a number of large centres. Nevertheless, at the most affordable level, there is still an inadequate supply of units. The fact is that a large proportion of low income families have to pay more than 30 percent of their income for rent.” Dugan said.
The average rents for two-bedroom apartments increased in all metropolitan areas except Toronto and Calgary, where rents were essentially flat. Dugan said. Nationally, rent increases were highest at the lower end of the rent spectrum.
The highest average monthly rents for two-bedroom apartments were in Toronto ($1,040), Vancouver ($965), and Ottawa ($932). The lowest average rents were in the Quebec towns of Trois-Rivi