January 13, 2009 — Moishe Alexander’s review on how the current world economy and Canadian economic down turn is affecting the Edmonton Alberta rental market
The Edmonton Alberta rental market is experiencing vacancy rate increases. In fact, the rental vacancy rate has increased substantially from 1.5% in 2007 to 2.4% in 2008.
It is tougher times for landlords in Edmonton Alberta to rent their units.
APARTMENT VACANCIES MOVE HIGHER IN 2008
Edmonton, Alberta - Credit Lana, Flickr
The Canada Mortgage and Housing Corporation reported that the Edmonton Alberta area is experiencing an increased amount of vacancies in rental housing in all sectors. Much of this is attributed to migration out of the province of Alberta, which has seen over 1600 families leave the Edmonton Alberta area in 2008. CMHC attributes some of this up-turn in the vacancy rate to competition from secondary rental market of the units, and investor owned condominium apartment increases in 2008.
INCREASED SUPPLY OF PURPOSE-BUILT RENTAL UNITS
According to Canada Mortgage and Housing Corporation, private homeowners and investors in Edmonton Alberta have increased the rental housing stock by 21% for the first 10 months of 2008. This is caused a surplus of rental housing stock in the Edmonton Alberta area.
SECONDARY RENTAL MARKET IS BECOMING INCREASINGLY IMPORTANT TO THE HOMEOWNER TO SUPPLEMENT THEIR INCOME DURING THIS WORLD ECONOMIC CRISIS
The Canada Mortgage and Housing Corporation report states that since there is a migration problem in Edmonton, and the unemployment rate is up 3.4%, a strong demand has occurred for rental units to be created by home owners, 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.
APARTMENT RENT INCREASES MODERATE IN 2008
The Canada Mortgage and Housing Corporation report states that last fall in Edmonton Alberta, a one-bedroom apartment that used to rent for $764.00 is now renting for $783.00 compared to the same period last year. A two-bedroom unit that rented last year for $744.00 are now renting for $762.00, which is approximately 25% increases.
Government sources say that with this increase cost, welfare recipients are hard pressed to rent anything in Edmonton Alberta.
INCENTIVES RETURN AS VACANCIES INCREASE
Canada Mortgage and Housing Corporation report that in 2007, and then in 2008, landlords have started offering tenants incentives for the first time in 15 years to rent apartments. Incentives often include benefits such as one-month free rent, or 2-year leases (with fixed rental payments), extra appliances, free cable TV, or free parking and or high-speed Internet.
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 Kelowna 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/64379/64379_2008_A01.pdf
