Posted by Moishe Alexander
Vacancy rate stable in October 2009
According to the results of the Rental Market Survey conducted by CMHC in October 2009, the vacancy rate remained rather stable in the Montréal metropolitan area, reaching 2.5 per cent, compared to 2.4 per cent in October 20081. The stronger than expected homeownership trend, especially starting in the second quarter, and the job losses among young people aged from 15 to 24 years offset the increase in migration, which kept the vacancy rate relatively stable over the past year. After easing from 2002 to 2006, the Montréal rental market has since stabilized. That being said, conditions remain relatively tight compared to the 1990s.
The difficult economic environment also had a direct impact on young renter clients. Nearly 15,000 jobs, most of them full-time, were lost among the group aged from 15 to 24 years between October 2008 and October 20092. Although the people in this age group account for only 7 per cent of renter households, a vast majority (89 per cent) of them rent their dwellings3 . The job losses very likely forced a number of these young people to stay with their parents or share their apartments with more roommates. Therefore, the difficult job market conditions for people aged from 15 to 24 years resulted in a decrease in demand for housing.
That said, the arrival of more immigrants acted as a counterbalance for the renters who left the rental market. According to our forecasts, net migration in the Montréal CMA should reach 30,000 people in 2009, up from 28,600 in 2008. Montréal received more immigrants this year, thanks to the higher immigration targets set by the Government of Quebec. A large majority (84 per cent) of the 55,000 immigrants that the province aims to welcome annually will settle in Montréal, and most will first choose to rent a dwelling. Immigration puts pressure on the Montréal rental market and keeps the vacancy rate low.
On the supply side, there have been fewer traditional rental housing starts in recent years, even though the vacancy rate has been relatively low. Builders still seem to be further attracted to more profitable markets, such as the condominium and retirement home segments. The rather limited growth of the rental housing stock is also helping to maintain the vacancy rate at a low level.
According to the survey results, larger apartments, that is, units with two bedrooms and those with three or more bedrooms, appear to be the most popular. In fact, demand for roomier units, notably from families, has been steady. The vacancy rates in these two unit categories reached 2.0 per cent and 1.7 per cent, respectively, well below the rates recorded for bachelor apartments (3.7 per cent) and one-bedroom units (3.2 per cent).
As well, the vacancy rates by rent range also revealed differences depending on unit size. In fact, apartments renting for less than $500 per month recorded the highest vacancy rate (3.2 per cent). These apartments are less popular, because they are usually smaller. By comparison, units with rents from $500 to $899 and apartments renting for $900 or over had lower rates, at 2.5 per cent and 2.8 per cent, respectively.