The average rental apartment vacancy rate in Canada’s 35 major centres increased to 2.8 per cent in October 2009 from 2.2 per cent in October 2008. The centres with the highest vacancy rates in 2009 were Windsor (13.0 per cent), Abbotsford (6.1 per cent), Peterborough (6.0 per cent), Calgary (5.3 per cent), and London (5.0 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Regina (0.6 per cent), Québec (0.6 per cent), St. John’s (0.9 per cent), Winnipeg (1.1 per cent), Kingston (1.3 per cent), and Victoria (1.4 per cent).

Demand for rental housing in Canada decreased due to slower growth in youth employment and improved affordability of homeownership options. Rental construction and competition from the condominium market also added upward pressure on vacancy rates.

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,169), Calgary ($1,099), Toronto ($1,096), and Ottawa ($1,028). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Saguenay ($518), Trois-Rivières ($520), and Sherbrooke ($553).

Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Regina (10.2 per cent), Saskatoon (8.3 per cent),Victoria (5.0 per cent), and St. John’s (4.9 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased by 2.3 per cent between October 2008 and October 2009.

CMHC’s October 2009 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto,Vancouver, and Victoria. In 2009, vacancy rates for rental condominium apartments were below two per cent in seven of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Toronto, Saskatoon, and Ottawa. However, Regina and Edmonton registered the highest vacancy rates for condominium apartments at 3.0 per cent and 3.1 per cent in 2009, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2009 were lower than vacancy rates in the conventional rental market in Ottawa, Saskatoon,Vancouver, Toronto, Edmonton, and Calgary. The highest average monthly rents for two- bedroom condominium apartments were in Toronto ($1,487),Vancouver ($1,448), Calgary ($1,310), and Victoria ($1,223). All surveyed centres posted average monthly rents for two- bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2009.

The vacancy rate throughout the St. John’s CMA (census metropolitan area) remained low in 2009. In fact, there was little change in the vacancy rate, which largely reflects the impact of solid economic activity and positive employment growth within the region. Robust residential construction activity, combined with healthy MLS®1 sales and a strong supply of existing homes for sale, translated into continued house price growth, once again making the transition from renting to home ownership challenging for renter households. CMHC’s rental market survey conducted during the first two weeks of October included the enumeration of 3,601 privately initiated apartment units within the St. John’s CMA. The survey identified 31 vacancies within the rental stock, translating into a vacancy rate of 0.9 per cent. This compares to a similar 0.8 per cent vacancy rate recorded in 2008, with the rate below one per cent now for two consecutive years and holding steady at its lowest level since 1980. The vacancy rate was one per cent or lower in every zone within the St. John’s area this year. The biggest change was within Remainder of Metro Area (zone 3), with a rate of 0.3 per cent compared to 0.8 per cent in 2008. St. John’s East (zone 1) posted a vacancy rate of 0.9 per cent versus 1.0 per cent last year. In St. John’s West (zone 2), the vacancy rate was 1.0 per cent compared to 0.7 per cent in 2008. St. John’s City (zones 1-2) posted a vacancy rate of 0.9 per cent versus 0.8 per cent a year earlier. Throughout the St. John’s region, vacancies remained highest in bachelor units at 1.5 per cent and lowest in three bedroom units at 0.4 per cent. The recorded vacancy rate for one and two bedroom apartments was 0.8 per cent for both. Average rents increased across the region for all bedroom types in 2009. The following percentage changes in average rent are based on the fixed sample, which includes structures common to the survey for both years (2008/2009). Bachelor unit average rents increased the most of all bedroom types at 6.2 per cent; one bedroom average rents increased 5.7 per cent; two bedroom unit average rents were up 4.9 per cent; and three bedroom rents increased 5.4 per cent. Overall, the total average rent for all bedroom types combined, advanced 5.5 per cent.

Based on the 2009 survey, bachelor unit average rents were $541; one bedroom average rents were $592; two bedroom units posted average rents of $677; and three bedroom rents came in at $713. Overall, the total average rent for all bedroom types combined was $643. The increase in average rents is a reflection of the upward pressure very low vacancies have exerted on rents since 2008, as well as increasing energy costs and the increased costs associated with operating and maintaining apartment buildings. Once again, current rent levels prevented the construction of multi-unit rental projects in 2009, making the rent/return equation uneconomical for developers and real estate investment trusts (REITs). This has been the situation for more than 20 years within the local rental market. However, local rental market dynamics have been changing, with fewer private owners and increasing corporate ownership. The buoyant St. John’s economy and housing market has seen these corporate entities become increasingly interested in the local rental market. In fact, they have purchased many apartment buildings in recent years. The expectation is that these and other players will engage in new multi-unit apartment building construction activity in the coming years, once average rents reach a point where project development becomes feasible.

The local rental market is driven by a number of factors. These factors have remained fairly constant over time and involve both demand and supply influences. Key factors affecting the demand dynamics for rental accommodations over the short term include economic activity, employment, migration trends and the home ownership rate. The supply side of the local rental market is affected by additions to the rental stock via new construction or conversion of existing space into apartments. Apartment supply can also be reduced by conversion activity when existing rental units get converted to condos or hotels. On rare occasions, demolition of apartments for alternate site use or loss due to fire may also diminish the supply of rental units. While CMHC’s rental market survey historically covered structures containing three or more apartment units only, both demand and supply has always been affected by competition from the secondary rental market (newly surveyed since 2007). This market consists of single-detached units; semi-detached, row and duplex units; and other- primarily accessory suites. Statistics for secondary rented units exclude apartments in purpose built rental structures with three rental units or more, condo apartments, units in institutions, and any dwelling whose type could not be identified in the survey. The estimated number of households in secondary rented units within the St. John’s CMA is quite substantial at 12,896, with an average rent of $653 compared to $618 in 2008. Refer to tables 5.1 and 5.2 for additional details regarding secondary rental market survey results.

Demand for privately-initiated rental apartment units in the Windsor Census Metropolitan Area (CMA), switched gears and increased in 2009. The high vacancy rate declined from the record 14.6 per cent in October 2008 to 13.0 per cent in October 2009.Vacancy rates were lower for all apartment types except bachelors, where the vacancy rate increased to 16.9 per cent. Several key factors have contributed to the turnaround in the number of vacant rental apartments in Windsor this fall despite a slightly larger supply. Migration is a key factor in housing demand and outmigration from the Windsor area has lessened. Low unemployment rates draw migrants to a centre in search of work. Windsor’s unemployment rate has been well above the provincial average over the last five years. Not only has this poor employment scenario meant fewer people were moving to Windsor, it has also meant Windsor residents moved elsewhere in search of work. Now that the future regarding the Big Three auto makers is more stable and there is more positive news of upcoming employment opportunities, the number of people leaving the Windsor area is estimated to have peaked in 2008. Higher student enrollment has also exerted downward pressure on rental vacancy rates. In times of high unemployment and with the current government programs promoting retraining, both the University of Windsor and St. Clair College have recorded record high enrolment this fall. Many of these students turn to the rental market for accommodation. Many renters took advantage of favourable buying conditions to enter the homeownership market over the past two years as borrowing rates were low and home prices in the Windsor area were negotiable. As the bulk of this first-time buyer segment has moved through the market at this time, fewer renters were leaving this fall as prices began to recover. In contrast, renters were still leaving the townhouse segment due to the higher rents. The rent for a three-bedroom townhouse averaged $934 in October 2009, an amount which would easily allow for a monthly mortgage payment on a starter home in Windsor. The total vacancy rate for townhouse units increased from 11.7 per cent in 2008 to 12.5 per cent in 2009.

Vacancy rates were lower throughout the zones that make up the Windsor CMA. Downtown Windsor, Zone 1, declined slightly from 17.5 per cent the previous year to 15.6 per cent in 2009. The vacancy rate decreased for one and two bedroom units and was higher for bachelor units. Often renters move up to larger units as they become available. However, very high youth unemployment meant that demand was low for the most affordable rental accommodation. Zone 1 has traditionally had a higher vacancy rate than any other Windsor zone in part due to the large proportion of older structures which often require more repairs and therefore may be considered less desirable by potential tenants. On a positive note, the opening of a satellite campus for St. Clair College’s school of art and design brought about 200 students to the downtown this fall. Further expansion plans in conjunction with the University of Windsor’s music, theatre and fine arts programs could bring a further 700 students to the area within the next two years. The vacancy rate for one bedroom apartments was highest in Zone 2 at 18.9 per cent. This zone has a number of smaller buildings with primarily one bedroom apartments. Smaller buildings, such as those with less than 20 units tend to have higher vacancies during periods of oversupply as tenants have options and preferences for larger buildings which tend to have more security, and professional on-site management. Rents for one bedroom units in this zone remain low in an attempt to lure new tenants or retain existing occupants. Traditionally in Windsor the most popular location for renters to choose is Zone 3- East Outer which had the lowest overall vacancy rate in the City at 10.5 per cent, as well as the lowest one bedroom vacancy rate at 8.5 per cent. The latter was significantly lower than the one-bedroom vacancy rates in surrounding zones. This zone includes larger buildings with prime locations along the river which are more attractive to tenants. These buildings offer newer units and professional on-site management. As well the larger property management firms have the resources available to offer rental incentives which many smaller landlords do not.

The vacancy rate for private rental apartment buildings with three or more units in the St. Catharines- Niagara CMA (hereinafter Niagara) was above the national and historical averages. According to the CMHC’s Fall 2009 Rental Market Survey, the vacancy rate edged up to 4.4 per cent in 2009. This was above the 20-year average level of 3.5 per cent, and an increase of 0.1 percentage point from last year. Four main factors placed upward pressure on the vacancy rate. First, record low mortgage rates in combination with lower prices in the earlier part of the year translated into very affordable mortgage carrying costs. Many buyers, in particular first- time buyers, took advantage and moved out of rental accommodation and into home ownership. A comparison of average rents and mortgage carrying costs based on the mortgage terms chosen by most first-time buyers (i.e., maximum amortization period and the minimum down payment allowed) suggests that the gap between the two narrowed by more than 50 per cent in the first quarter of 2009.

Also, youth aged 15 to 24 are a key source of rental demand. Weaker employment among youth in this age group meant that some of them, after losing their jobs, moved back into their parents’ homes, or alternatively, postponed a decision to move out. Total employment for all age groups declined by around 11,000 people or 5.6 per cent when comparing the average level in the 12 months ending September 2009 to average level in the same period a year earlier.Youth employment declined by 4,500 people or 14 per cent, of which 2,900 in full- time positions and the rest in part- time jobs.

Finally, there were fewer international immigrants in 2009, due to the global economic slowdown. Since they traditionally tend to rent after landing in Canada, this implies that rental demand in 2009 was not as strong as in the previous years. Many international migrants find it difficult to settle in the region and land a job. Instead, they prefer to settle in major centres, such as the Greater Toronto Area, where they are more likely to find their first job and where there are established social networks.

Demand for rental apartments in both the Kitchener and Guelph CMAs decreased in October 2009. The average vacancy rate for privately- initiated rental apartments in the Kitchener CMA increased to 3.3 per cent from 1.8 per cent in October 2008. In the Guelph CMA, the vacancy rate rose to 4.1 per cent from 2.3 per cent last October.

A number of factors, both demographic and economic, contributed to the decreased demand for rental accommodations. These factors included renters moving to home ownership, higher unemployment and lower demand from young adults. Although the main reason vacancy rates were up was a decrease in demand, additional rental housing which was not completed in time to be included in the survey but was available for occupancy before the survey also had some impact.

Many first-time buyers made the move to home ownership and vacated their rental units in 2009. Mortgage rates decreased to their lowest level in more than 60 years. With the uncertainty in the economy, home price growth was limited. As a result, mortgage carrying costs became more affordable. First-time homebuyers who had remained on the sidelines in the final quarter of 2008 and the first quarter of 2009, propelled sales of existing homes to strong levels in the second and third quarters of 2009.

Employment in the Kitchener CMA for the first three quarters of 2009 declined by 1.4 per cent, or 3,600 jobs, compared to the same period in 2008. All of the jobs lost were full time. Unemployment increased across all age groups. The unemployment rate for youth jumped to 15 per cent. Those in the 15-24 age group typically rent. Consequently, many youth chose to remain at home or double up with other rental households, resulting in more vacant units.

In the Guelph CMA, employment decreased by 2,600 jobs, or 3.4 per cent. As in the Kitchener CMA, unemployment increased across all age groups. Some rental households doubled up or made alternative living arrangements. As a result, fewer rental units were occupied.

The rental market eased in the Trois- Rivières CMA this year. According to the results of the Rental Market Survey conducted in October by Canada Mortgage and Housing Corporation (CMHC), the proportion of unoccupied units reached 2.7 per cent, compared to 1.7 per cent in the fall of 2008. In so doing, the vacancy rate surpassed the 2-per-cent mark for the first time since 2002. This increase, the third in as many years and the largest, reflects a certain easing of the market. In fact, since 2003, rental market conditions had been particularly tight in the Trois- Rivières area, with the proportion of vacant units hovering around 1.5 per cent. It should be noted however average for the last 20 years (5 per cent). In the fall of 2009, 435 units were vacant (compared to 273 in October 2008) out of a total stock of 16,276 apartments contained in privately initiated buildings with three or more housing units. Many new units and a

The low vacancy rates registered in the area for the past several years greatly stimulated rental housing construction. Until now, this additional supply had been just counterbalanced by the strong demand, which was attributable to the dynamic migration. In 2009, however, rental housing construction maintained the same pace, but demand declined slightly. The weaker job market in the Trois- Rivières area therefore removed the upward pressure on rental housing demand. For one thing, the economic uncertainty that has been looming over Trois-Rivières for several quarters has forced some workers to leave this area for another. At the same time, this economic environment has made the area less attractive in the eyes of job seekers from other areas. Consequently, the supply of housing units exceeded demand, which pushed up the vacancy rate. In addition, financing conditions, which have rarely been so favourable, prompted a few renter households to access homeownership. Given the low mortgage rates, some may even have moved up their decision to buy, which, in turn, vacated a few rental dwellings.

In October 2009, stable rental market conditions were noted in four of the six CMAs in the province, as the Québec, Gatineau, Montréal and Saguenay areas did not register any significant change in their vacancy rates compared to October 2008. This past October, the Sherbrooke CMA had the highest vacancy rate in the province (3.9 per cent), followed by Trois-Rivières (2.7 per cent), Montréal (2.5 per cent), Gatineau (2.2 per cent), Saguenay (1.5 per cent) and Québec (0.6 per cent).

While the vacancy rates went up in all sectors of the CMA, Downtown and Bécancour stood out. In fact, these two zones, which had the highest vacancy rates in the CMA, were responsible for the increase in the overall vacancy rate. In October 2009, the proportions of unoccupied units reached 5.0 per cent in the Downtown zone and 9.1 per cent in Bécancour. When the market eases, the Downtown zone is quite often the first to see its vacancy rate rise. This is due to the fact that its housing stock is older. It has been noted that, as units are vacated in other sectors of the CMA, tenants leave their Downtown dwellings for these units, which are often newer and more modern. In Bécancour, the market seems to have been experiencing difficulties since the closing of a plant in this zone. However, the upcoming commissioning of the Twin Rivers Technologies oilseed crushing plant and the construction of a complex for the production of polycrystalline silicon for the solar panel industry in the industrial and harbour park should give a boost to this zone and put upward pressure on housing demand there.

Elsewhere in the CMA, the vacancy rates remained relatively low. The proportions of unoccupied units reached 2.5 per cent in Cap-de-la- Madeleine and Saint-Louis-de-France and 2.1 per cent in the Université du Québec à Trois-Rivières sector, where demand for rental housing stays relatively constant in any given year, thanks to the presence of the university and the Cegep. Lastly, the vacancy rates attained 2.0 per cent in the North sector and 1.6 per cent in Trois-Rivières-Ouest.

Vacancy rate keeps rising According to the results of the latest CMHC Rental Market Survey conducted in October 2009, the rental apartment vacancy rate1 increased again in the Sherbrooke CMA. After climbing by 0.4 of a percentage point in 2008 to 2.8 per cent, the vacancy rate continued to rise in 2009, reaching 3.9 per cent. As shown in Figure 1, the rental market has now been easing more significantly for the past three years in the Sherbrooke area. However, the proportion of unoccupied units still remained far from the levels observed in the late 1990s, when more than 7 per cent of rental apartments were vacant.

In the other CMAs across the province, the Québec area still had the tightest rental market, with fewer than 1 per cent of apartments vacant. As for the Saguenay, Montréal and Gatineau areas, their proportions of unoccupied units remained relatively stable between October 2008 and October 2009, edging down from 1.6 per cent to 1.5 per cent in Saguenay and rising slightly from 2.4 per cent to 2.5 per cent in Montréal and from 1.9 per cent to 2.2 per cent in Gatineau. In the Trois-Rivières CMA, however, the vacancy rate was up, reaching 2.7 per cent (+1 percentage point). Among all of Quebec’s urban centres with 100,000 or inhabitants, Sherbrooke had the highest percentage of vacant rental housing units in 2009, for a second straight year.

Supply increases while demand slowsThe vacancy rate hike in the Sherbrooke CMA in 2009 resulted from a moderating demand and a rising supply.

On the demand side, migrants who come to an area, whether from other areas of Quebec or elsewhere, are definitely one of the main factors. In fact, most newcomers to an area choose to rent when they arrive. The relationship between migration and the vacancy rate is illustrated in Figure 3, with high net migration often being associated with a tighter rental market and the opposite also being observed.

Preliminary data2 show that no substantial immigration gains should be registered in the Sherbrooke CMA since the last survey. Stagnant immigration is no doubt one of the factors that contributed to moderating rental housing demand in the Sherbrooke area this year.

As well, the Sherbrooke CMA has recorded negative net interregional migration3 of about 100 people among the group aged from 15 to 34 years4, for the past two years. In other words, more young people left the capital of the Eastern Townships than settled there. This decrease therefore moderated demand for rental housing units, as the young population is an important client group on the rental market. In fact, according to data from the latest census (2006), most Sherbrooke area households whose primary maintainer is aged from 15 to 34 years are renters.

In addition to migration, several other factors contributed to slowing rental housing demand in the Sherbrooke CMA in 2009. One such factor was that the labour market was less favourable for young people (labour force aged from 15 to 24 years) between the October 2008 and October 2009 surveys. Compared to last year, the average employment level fell by 14 per cent among young people aged from 15 to 24 years, with this decrease mainly affecting full-time jobs (-24 per cent). In these conditions, many young people may have been deterred from leaving the family home, or encouraged to share accommodations, which also slowed demand on the rental market.
Changes in the age structure of a population (in this case, the aging of the population) may also have an effect on the proportion of unoccupied rental housing units in an area. According to our latest demographic projections, the growth in the number of young households (aged from 15 to 34 years) in the Sherbrooke area will be relatively weak, if not stagnant, between 2008 and 2009, which will limit the potential renter client pool. Negative growth is even forecast for the next few years, which will further curb demand on this market.

Another major reason for the vacancy rate increase is that financing conditions have been favourable to home buying, which means that a number of renter households possibly became homeowners. In fact, the strong sales of existing and new homes registered in the CMA in recent years seem to support this point. The same scenario was likely repeated in 2009, which again drove up the percentage of vacant units in the Sherbrooke area.

With such demand conditions and a rental housing supply that increased by 2.5 per cent between our last two surveys (from 30,842 units in 2008 to 31,621 in 2009), it was therefore not surprising to see a hike in the vacancy rate in 2009 in the Sherbrooke CMA.

Lastly, it should be mentioned that, even with the low vacancy rates observed in recent years, the growth in the supply on the rental market has been rather limited. It should not be forgotten that, in the late 1980s, rental housing construction had been very strong in the CMA, such that the vacancy rates had hovered around 10 per cent in the years that followed. Some builders may have then decided to focus their activities on other market segments. Now, even with the low vacancy rates registered in recent years, rental housing construction has never returned to its previous pace. This is generally the case, as a lag is often observed between changes in the vacancy rate on a market and the ensuing adjustment in the level of rental housing starts.

Funding of $420,000 for six new affordable housing rental units for seniors living on low income was announced today in Glencoe.

Bev Shipley, Member of Parliament for Lambton – Kent – Middlesex, on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development Canada and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), and Maria Van Bommel, Parliamentary Assistant to the Minister of Children and Youth Services and Member of Provincial Parliament for Lambton – Kent – Middlesex, on behalf of the Honourable Jim Watson, Ontario’s Minister of Municipal Affairs and Housing; along with Doug Reycraft, Mayor of the Municipality of Southwest Middlesex made the announcement.

“The Government of Canada is helping Canadians during these tough economic times and giving hope to seniors who need quality, affordable housing that meets their needs,” said MP Shipley. “This investment is possible through Canada’s Economic Action Plan, the federal government’s plan to stimulate the economy and create jobs during the global recession. For Ontario, this includes a $1.2 billion joint investment.”

“New housing initiatives add significant support to the McGuinty government’s Poverty Reduction Strategy,” said MPP Van Bommel. “We will continue to work with our municipal partners to ensure more units are built during the life of this program.”

“The six new affordable housing units in this eight-unit building are a welcome addition to our rental stock in Southwest Middlesex,” said Mayor Reycraft. “I have heard from several seniors who are eagerly awaiting the completion of the apartment building. The investment by the federal and provincial governments, and by Sundip and Melissa Bajaj, in these affordable units is great news.”

The Government of Canada wants to ensure that Canadians on fixed incomes can live with independence and dignity and remain in their communities, close to family and friends. Canada’s Economic Action Plan provides $400 million, over two years, to build new rental housing for low-income seniors. Overall, the Economic Action Plan includes $2 billion for new and existing social housing, plus up to $2 billion in loans to municipalities for housing-related infrastructure.

Canada’s Economic Action Plan builds on the Government of Canada’s commitment in 2008 of more than $1.9 billion, over the next five years, to improve and build new affordable housing and help the homeless.

Today’s announcement celebrates funding for six new affordable rental units at 173 Main Street in Glencoe. The project is sponsored by Sundip and Melissa Bajaj.

According to the results of the latest Rental Market Survey conducted by Canada Mortgage and Housing Corporation (CMHC), the rental stayed tight in the Saguenay CMA, as the rental housing vacancy rate reached 1.5 per cent in October 2009, compared to 1.6 per cent in October 2008. While demand for rental housing stayed strong, this year marked a break in a downward trend that had been prevailing since 2005, since this indicator remained relatively stable. The economic uncertainty surely had an impact on the formation of renter households and migration movements. However, given the small increase in supply, the net effect on the vacancy rate was almost nil.

Saguenay was not an exception in Quebec, with the vacancy rates remaining relatively stable in several other CMAs. In fact, only Sherbrooke and Trois-Rivières saw their markets ease, as their vacancy rates of 3.9 per cent and 2.7 per cent, respectively, were the highest in the province. In order, Montréal (with a vacancy rate of 2.5 per cent) and Gatineau (2.2 per cent) followed ahead Saguenay (1.5 per cent), while the Québec CMA (0.6 per cent) brought up the rear with the lowest rate in the province and one of lowest in the country. Across Canada, the vacancy rates were rather stable in more than one third of the CMAs, while they rose in almost all the other areas.

Economic and demographic conditions The employment level in the Saguenay CMA has remained steady since 2003, despite a small decrease in 2008 (-1.6 per cent). For the last quarter of 2008 and the first three of 2009, the average employment level reached 69,300 workers, compared to 68,800 for the same period a year earlier (+0.7 per cent). In addition, the dynamic labour market in the area has maintained the employment rate (the proportion of the population with jobs) around a record level of 55 per cent1. The job market is still holding up, which is maintaining demand on the rental market.

Not only did the dynamic labour market support the formation of renter households thanks to the income generated, but it also enhanced the appeal of the area. Net migration has improved in the Saguenay CMA, as the migration deficits have been getting smaller every year, decreasing from 1,341 people 2004/2005 to 852 people in 2007/2008, according to Statistics Canada estimates. Also, given that mobility is greater among young people (aged from 20 to 29 years) and that most of them are renters, the decreasing migration deficits have without a doubt been contributing to supporting demand for rental housing.

That being said, the uncertain economic conditions that prevailed at the end of 2008 and the beginning of 2009 likely had an impact on migration movements. Traditionally, the Québec CMA has been the main destination of emigrants from Saguenay2. The good performance of the Québec area job market during a difficult period evidently attracted more households seeking new employment opportunities. In these conditions, the growth in housing demand in the Saguenay area will have been less vigorous than in previous years.

The aging of the population is another factor that stimulates rental housing demand. Between 15 and 55 years, the older primary household maintainers get, the less likely they are to live in rental housing. From the age of 55 years, households increasingly choose to rent a dwelling. When they get older, the seniors’ housing market remains an option for some, but the traditional rental market may be an alternative for households who do not have the financial means to move to a retirement home. In addition, over the coming years, household formation will be concentrated among people aged 55 years or older.

New rental housing supply The additional supply of traditional rental housing was rather limited between the October 2008 and October 2009 surveys. In fact, only 50 new traditional rental housing units were completed during this time (this figure, however, excludes units that have been converted into rental dwellings). As well, 50 new duplex units were built between July 2008 and June 2009, potentially adding 25 more dwellings to the rental market (as one out of two units is usually occupied by the owner of these buildings). The stable vacancy rate was therefore also due to the limited supply of new rental units, in addition to the slower growth in demand.

Contrary to last year, when rental market conditions tightened in all sectors of the Saguenay CMA, this year, the results were mixed. The market tightened in Jonquière, on account of two factors: first, the average rent level was lower in this sector and, second, the estimated change in the average rent was less significant there than elsewhere. The Chicoutimi-Sud and La Baie rental markets, for their part, remained stable, while Chicoutimi-Nord was the only sector where conditions eased. More specifically, the Jonquière market, with a vacancy rate that fell from 2.4 per cent in October 2008 to 1.5 per cent in October 2009, has now become almost as tight as the Chicoutimi-Sud market. Still, this last market remained the tightest in the area, with a vacancy rate that reached 1.3 per cent in October 2009, versus 1.0 per cent in October 2008. In La Baie, the proportion of vacancy units remained relatively stable, reaching 2.2 per cent in the fall of 2009, compared to 2.1 per cent a year earlier. Lastly, the vacancy rate in the Chicoutimi- Nord sector rose to 2.1 per cent in October 2009 from 0.7 per cent in October 2008.

The estimated change in the average rent was 3.4 per cent between October 2008 and October 2009. The tighter rental market conditions are certainly not unrelated to this situation. However, the size of the changes varied with the sectors. The sector with the tightest market conditions and the strongest demand in the area, Chicoutimi-Sud, also posted the greatest estimated change in the average rent (+4.6 per cent). The Jonquière sector, for its part, showed the smallest change in the average rent (+1.7 per cent) and a tighter market. This less significant change possibly attracted more households to this sector. As for the other two sectors of the Saguenay CMA, the changes in the average rents were 3.2 per cent in La Baie and 4.4 per cent in Chicoutimi-Nord.

In 2009, the Saguenay CMA had the most affordable rental market among all the Canadian metropolitan areas targeted by the rental affordability indicator. With this indicator at 152, Saguenay came in just ahead of Sherbrooke (151). The more rapid growth in the median income than in the median rent helped make housing more affordable in the area.

The rental affordability indicator is a gauge of how affordable a rental market is for those households who rent within that market. The rental affordability indicator examines a three-year moving average of median income of renter households and compares it to the median rent for a two-bedroom apartment in the centre in which they live. More specifically, the level of income required for a household to rent a median priced two-bedroom apartment, using 30 per cent of its income, is calculated. The three-year moving average of median income of households in a centre is then divided by this required income. The resulting number is then multiplied by 100 to form the indicator. An indicator value of 100 indicates that 30 per cent of the median income of renter households is necessary to rent a two-bedroom apartment going at the median rental rate. A value above 100 indicates that less than 30 per cent of the median income is required to rent a two- bedroom apartment, conversely, a value below 100 indicates that more than 30 per cent of the median income is required to rent the same unit. In general, as the indicator increases, the market becomes more affordable; as the indicator declines, the market becomes less affordable.

The average rental apartment vacancy rate in Canada’s 35 major centres increased to 2.8 per cent in October 2009 from 2.2 per cent in October 2008, according to the Rental Market Survey released today by Canada Mortgage and Housing Corporation (CMHC).

“Demand for rental housing in Canada decreased due to slower growth in youth employment and improved affordability of homeownership options”, said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Rental construction and competition from the condominium market also added upward pressure on vacancy rates.’

Between October 2008 and September 2009, 15,657 rental units and 45,655 condominium units were completed in Canada’s 35 major centres. Condominiums are a relatively inexpensive type of housing for renters moving to home ownership. Also, some condominium apartments are owned by investors who rent them out.

Provincial vacancy rates in October 2009 increased in eight out of ten provinces. The largest increases were in Alberta where the vacancy rate increased by 3 percentage points to 5.5 per cent and British Columbia where the vacancy rate rose by 1.8 percentage points to 2.8 per cent. Vacancy rates decreased by 0.1 of a percentage point in Newfoundland and Labrador to 1.0 per cent, and by 0.4 of a percentage point in Nova Scotia to 3.1 per cent.

The centres with the highest vacancy rates in 2009 were Windsor (13 per cent), Abbotsford (6.1 per cent), Peterborough (6.0 per cent), Calgary (5.3 per cent), and London (5.0 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Regina (0.6 per cent), Québec (0.6 per cent), St. John’s (0.9 per cent), Winnipeg (1.1 per cent), Kingston (1.3 per cent), and Victoria (1.4 per cent).

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,169), Calgary ($1,099), Toronto ($1,096), and Ottawa ($1,028). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Saguenay ($518), Trois-Rivières ($520), and Sherbrooke ($553).

Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Regina (10.2 per cent), Saskatoon (8.3 per cent), Victoria (5.0 per cent), and St. John’s (4.9 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased by 2.3 per cent between October 2008 and October 2009.

CMHC’s October 2009 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto, Vancouver, and Victoria. In 2009, vacancy rates for rental condominium apartments were below two per cent in seven of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Toronto, Saskatoon, and Ottawa. However, Regina and Edmonton registered the highest vacancy rates for condominium apartments at 3.0 per cent and 3.1 per cent in 2009, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2009 were lower than vacancy rates in the conventional rental market in Ottawa, Saskatoon, Vancouver, Toronto, Edmonton, and Calgary. The highest average monthly rents for two-bedroom condominium apartments were in Toronto ($1,487), Vancouver ($1,448), Calgary ($1,310), and Victoria ($1,223). All surveyed centres posted average monthly rents for two-bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2009.

CMHC’s Rental Market Survey also gathers information on monthly rents in types of dwellings other than private apartments and condominium apartments, such as duplexes, and accessory apartments for 15 major centres.

The Rental Market Report for major centres also includes an affordability indicator for most centres. The rental affordability indicator is used to examine trends in rental affordability within a centre.

CMHC’s Rental Market Survey is conducted twice a year, in April and in October, to provide vacancy rate and rent information on privately initiated apartment structures containing at least three rental units. However, due to possible seasonal factors, the April and October results are not compared.

As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.