January 13, 2009 — Moishe Alexander’s review on how the current world economy and Canadian economic down turn is affecting the Vancouver and Abbotsford BC rental market
Vancouver BC - Credits D'Arcy Norman, Flickr
The Vancouver and Abbotsford BC rental market has one of the lowest apartment vacancy rate at 0.5% in the country. In fact, the rental town house vacancy rate dropped substantially to 0.3% for 2008. These two figures together leave a net vacancy rate of 0.5%.
It is desperate times for tenants in the cities of Vancouver and Abbotsford, British Columbia.
RENTAL DEMAND HOLDS STRONG FOR VANCOUVER AND ABBOTSFORD
The Canada Mortgage and Housing Corporation reported that the Vancouver and Abbotsford area of BC is experiencing an increase need for rental housing in all sectors. Much of this is contributing to the demand by the significant post secondary population in the area along with a strong local labor market. These statements and figures come from the rental market report issued in 2008 by Canada Mortgage and Housing Corporation. More than 30,000 people (net migration) moved to Vancouver last year from other provinces and countries putting additional stress on an already stressed out rental housing market.
VERY LITTLE NEW SUPPLY OF PURPOSE-BUILT RENTAL UNITS
According to Canada Mortgage and Housing Corporation, despite the extreme demand for rental housing in Vancouver and Abbotsford BC, only 162 purpose-built rental starts occurred in Vancouver and 32 in Abbotsford for the first 10 months of 2008. This is caused a panic for tenants and an extreme appreciation of condominium prices in Vancouver and Abbotsford BC.
SECONDARY RENTAL MARKET BECOMING INCREASINGLY IMPORTANT
The Canada Mortgage and Housing Corporation report states that since there is limited stock of purposed-built rental units in Vancouver and Abbotsford BC, a strong demand has occurred for rental units to be created by homeowners, which is called the “secondary rental market”. Pressure is being excreted on the local municipality cities to relax their zoning and building codes to permit additional secondary rental units in private homes.
RENTS RISE AT STEADY PACE
The Canada Mortgage and Housing Corporation report states that last fall in Vancouver and Abbotsford BC a one bedroom apartment that used to rent for $782.00 is now renting for $986.00 compared to the same period last year. A two bedroom units that rented last year for $761.00 are now renting for $964.00, which is approximately 25% increases.
Government sources say that with this increase cost, welfare recipients are hard pressed to rent anything in Vancouver and Abbotsford BC. Tight vacancy rates in this area of the province have caused rents to increase substantially for the same period last year. However, rent increases in purpose-built apartment rent units were moderate in most areas of the city including the City of Vancouver, New Westminister, Langley, and Maple Ridge.
RENTAL MARKET FORECAST
Canada Mortgage and Housing Corporation is projecting that vacancy rates in Vancouver and Abbotsford BC will remain the lowest in the country in 2009. Mainly due to non-construction of rental units and a significant increase in migration. In fact, Canada Mortgage and Housing Corporation is predicting that the vacancy rate in Vancouver and Abbotsford BC for the period ending 2009 will be 0.5%, which is an astonishing low vacancy rate.
RENTAL AFFORDABILITY INDICATOR
Canada Mortgage and Housing Corporation affordability indicator indicates that the value of 100 suggests that 30% of the median income of rental households is necessary to rent a two bedroom apartment, well above the Canadian average.
NATIONAL VACANCY RATE DECREASED IN OCTOBER 2008
Canada Mortgage and Housing Corporation reports that the vacancy rate in Canada’s 34 major centers decreased to 2.2% from 2.6% in October of 2008, for the same period the year before. Vacancy rates were as high as 14.6% in Windsor to a low of 0.3% in Vancouver and Abbotsford BC.
Canada Mortgage and Housing Corporation reports that the highest average monthly rent for a two bedroom apartment is in Calgary, Alberta with a monthly rental cost of $1,148.00 to a low of $543.00 in Sherbrooke, Quebec.
You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64467/64467_2008_A01.pdf