Results from Canada Mortgage and Housing Corporation’s recently completed Rental Market Survey* revealed a higher vacancy rate for the Moncton CMA in the fall of 2009. In October of this year, the number of vacant units in Greater Moncton stood at 375. In comparison, there were 234 vacant units recorded at the time of last year’s Rental Market Survey. Consequently, the vacancy rate in Greater Moncton was up from last year’s level of 2.4 per cent to 3.8 per cent in the fall of 2009. The vacancy rate for the popular two bedroom units was consistent with the change in the overall vacancy rate, climbing from last year’s rate of 2.6 per cent to 3.6 per cent. This was not unexpected as two bedroom units account for approximately two thirds of the rental universe in the Moncton CMA. The vacancy rate for one bedroom units reached four per cent in the fall of 2009. This marked a significant increase from the low 1.5 per cent vacancy rate recorded last October. A general desire on behalf of local renters for the increased living space provided by two bedroom units has effectively reduced demand for one bedroom units. Within the tri-community area, Dieppe City had the lowest vacancy rate at 2.2 per cent, followed by the Town of Riverview and Moncton City at 3.4 and 4.0 per cent, respectively. In the outlying areas of the Moncton CMA, the vacancy rate rebounded from last year’s low of 0.9 per cent, climbing to 3.1 per cent. * The survey, completed during the first two weeks of October, is limited to privately initiated structures comprised of at least three rental units that were available for rent or completed before June 30, 2009.

In 2009, economic development in Greater Moncton continued to follow the same positive trend that has defined the region over the past decade. Overall employment, as of the end of October, was on pace to exceed last year’s record setting level. As a result of the stronger job market, Greater Moncton has enjoyed the strongest in-migration of all regions in the province during the past ten years. Housing market conditions in the Moncton CMA, starting last year, have become increasingly favorable to potential home owners. In particular, mortgage rates have remained at historically low levels and new listings have retreated moderately from record levels set in 2008. As a result, home ownership has moved within reach for a larger number of people in Greater Moncton, including those who currently are renters, thus limiting demand for rental units. In the tri-community area, the rental market in the Town of Riverview remained the most stable during the past 12 months, with the local vacancy rate remaining unchanged at 3.4 per cent. Rental unit demand had been on the rise in Riverview in recent years. Despite higher than average apartment starts in both 2007 and 2008, the vacancy rate declined in both years. In 2009, a decline in rental unit demand was offset by reduced rental unit construction, leading to the local vacancy rate remaining unchanged.

In Moncton City, the vacancy rate was comparable to the overall rate for the CMA at 4.0 per cent. Population growth has remained positive in Moncton City proper as the region’s economy continues to support economic development and attract people to the area. However, in-migration in 2009 has slowed compared to last year’s above average pace. In addition, apartment starts in Moncton City in 2008 were higher than the average for the last five years. This resulted in a relatively large infusion of new units in 2009 as projects started last year were completed. As such, local supply was ahead of demand with Moncton City’s vacancy rate rising to 4.0 per cent from last year’s level of 2.4 per cent. The vacancy rates in each of Moncton City’s four separate zones also increased in 2009. The largest fluctuation occurred in East Moncton. Last year, this zone posted Moncton City’s lowest vacancy rate at 1.9 per cent. In the fall of 2009, the vacancy rate in East Moncton was the highest at 4.6 per cent. In contrast, North Moncton had the lowest vacancy rate at 2.7 per cent. Not only was it the lowest, it was also the least changed among Moncton City’s four different zones, climbing 0.6 percentage points from last year’s rate of 2.1 per cent. In Central and West Moncton, the vacancy rate in the fall of 2009 was up to 4.5 and 3.6 per cent, respectively.

In the City of Dieppe, the vacancy rate inched up to 2.2 per cent in the fall of 2009, a moderate increase from 1.8 per cent last year. In general terms, population growth in Dieppe has outpaced both Moncton and Riverview in recent years. As a result, residential development has flourished in Dieppe. During this time, the popularity of semi-detached homes has increased resulting in tremendous growth in the Moncton CMA, with a significant number of new units added in the City of Dieppe as well. With semi-detached homes, consumers can obtain a newly-built product with a mortgage payment comparable to the typical monthly rent for a newer two bedroom apartment, while allowing the owner to build equity in their new home. As such, semi-detached units in Dieppe, which have nearly matched last year’s record setting pace in 2009, continue to lure renters to homeownership. This year, apartment starts are expected to post the third annual decline in Dieppe. However, with fewer consumers seeking rental units, supply and demand have maintained a relative balance, resulting in a moderate 0.4 percentage point change in Dieppe’s vacancy rate.

The overall vacancy rate in Halifax stood at 2.9 per cent in October, down from 3.4 per cent last fall. Vacancy rates in the Halifax Regional Municipality (HRM) trended down in all submarkets but one in 2009. Average rents, based on structures common to both the 2008 and 2009 surveys, were up 2.8 per cent. In the HRM, Halifax City saw the largest decline in vacancies as the rate fell from 2.7 to 2.0 per cent in 2009. The Mainland North area of Halifax City saw the vacancy rate fall a full percentage point to 1.6 per cent. This submarket has a significant impact on the overall HRM vacancy rate as it is home to 28 per cent of the rental stock – the most of any submarket. On the other side of the harbor, Dartmouth City saw a more modest decline in vacancies from a rate of 5.5 to 5.2 per cent in 2009. Dartmouth North again saw the highest vacancy rate in the HRM at 5.6 per cent in 2009 while Dartmouth East recorded the only increase in vacancies – climbing from 4.4 to 5.4 per cent. The Metro Halifax vacancy rate of 2.9 per cent is only slightly higher than the national average of 2.8 per cent. Apart from Windsor, Halifax saw the largest decline in vacancies in 2009

with a 0.5 percentage point decrease. Canadian cities with the lowest vacancy rates in 2009 were Quebec City, Regina and St. John’s with rates of 0.6, 0.6 and 0.9 per cent respectively. Three of the cities with the highest vacancy rates, Calgary, Peterborough and Abbotsford also saw the largest increases in 2009 as vacancies climbed more than three percentage points in each of these major centres. Vacancy rates have remained relatively stable in Halifax for the past decade. In fact, the 2009 vacancy rate of 2.9 is only slightly below the ten-year average vacancy rate of 3.0 per cent. The vacancy rate has not fluctuated much over that time period, in spite of significant levels of new construction and new rental units being added to the supply. Over the past ten years, there have been approximately 585 new rental units added to the supply each year. Currently, there are nearly 600 more rental units under construction (as of October 2009) in the HRM most of which will be completed over the next 12 to 18 months. It is expected that current demand will be sufficient to offset the additional supply and keep vacancy rates within the recent ten-year range. Average rents in Halifax, increased by 2.8 per cent in 2009 compared to 2.0 per cent growth in both 2007 and 2008. This percentage increase is based on a fixed sample methodology including structures common to both this year’s and last year’s survey. Rents increased in response to the elevated demand that pushed vacancy rates downward. Based solely on this year’s sample, the average rent for a two- bedroom unit in Halifax was $877 in 2009. * The survey, completed during the first two weeks of October, is limited to privately initiated structures comprised of at least three rental units that were available for rent or completed before June 30, 2009.

Demand for two-bedroom units increased the most in Halifax in 2009. Two-bedroom units account for nearly 50 per cent of the rental stock in the city and saw the largest decline in vacancy rates from 4.2 to 3.3 per cent in 2009. The decrease in two-bedroom vacancies was largely impacted by the halving of the vacancy rate in Mainland North from 3.0 to 1.5 per cent. One and three-bedroom units saw more moderate vacancy rate declines from 2.8 to 2.4 per cent and from 2.9 to 2.7 per cent respectively. Bachelor units were the only bedroom-type to see an increase in the vacancy rate from 2.1 to 2.5 per cent in 2009. The vacancy rate in the south end of the Peninsula remained unchanged at 1.3 per cent with this area continuing to report the lowest rate in the HRM. Dartmouth North saw its vacancy rate decline from 6.1 to 5.6 per cent in 2009, but retained its 2008 position as having the highest vacancy rate in Halifax.

In terms of age, newer buildings continue to record the lowest vacancy rates, albeit slightly higher than last year. In buildings built since 2000, the vacancy rate increased from 0.8 to 1.0 per cent. This rate is less than half the rate of buildings built prior to 2000. Buildings built prior to 1974 saw the largest decline in vacancy rates of 1.3 percentage points. The oldest buildings (i.e., those built prior to 1960) saw vacancies decline from 4.5 to 3.2 per cent while the next oldest group (i.e., those built between 1960 and 1974) saw vacancies decline from 5.7 to 4.4 per cent. Based on building size, larger buildings continued to record the lowest vacancy rates in the city. Buildings with more than 100 units saw vacancies decline from 2.6 to 2.1 per cent. Smaller buildings with six to 19 units saw the highest vacancy rate of 3.8 per cent in 2009, but also the largest decline from 4.8 per cent in 2008.

The overall average rent increased 2.8 per cent in 2009 based on units common to both the 2008 and 2009 surveys. Three-bedroom units saw the largest increase of 3.1 per cent, while one-bedroom units saw the lowest increase in average rents of 2.6 per cent. Just as in 2008, the average rent increases for two- bedroom units matched the overall HRM increase of 2.8 per cent. In terms of submarkets, Peninsula South saw the most growth in average rents at 4.2 per cent while Dartmouth North saw the lowest increase in average rents of 1.9 per cent. Based solely on the 2009 survey data, the average rent for a two-bedroom apartment in Halifax was $877 per month as of October. Peninsula South remains the highest priced market in the HRM with an average two- bedroom unit renting for $1,318 per month which is 50 per cent higher than the overall HRM average. All other submarkets saw rents below the overall average except for Peninsula North which is just one per cent above the average. The lowest average rents can be found in Dartmouth South and Mainland South where two-bedroom units rent for $683 and $728 per month respectively. Newer buildings continue to

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.

As stock markets around the world have taken a fall with the economic recession, one market that remains strong is Israeli real estate. The Park Hyatt Hotel was host to Israeli real estate firms including Azorim, Gindi Holdings, Dimri Building & Development, Pollock Real Estate and Ashdar Building Company a few weeks ago when they flew into Toronto to deliver a presentation to potential investors.

It was the first time they’d done so directly, according to Ainnat Lifshitz, director of marketing and sales of Bayit4U, the company that coordinated the event. Alongside the real estate developers were bank representatives and lawyers who “give a panoramic view of Israel and cover all aspects of real estate,” she said.

Residential properties in Israel were under the spotlight as they’ve performed well in recent months. According to Lifshitz, demand for homes in Israel was up 14.6 percent in April 2009, compared to the same period in 2008.

http://www.canadasisrael.ca/2009/07/israeli-house-for-sale-in-toronto/

reviewed by Moishe Alexander, CFC canadian funding corp CEO

TED-Spread On Wednesday, this widely quoted credit risk indicator fell to a 26-month low. The TED spread is now below its August 2007 levels. (August 2007 is generally viewed as the beginning of the subprime crisis.)

The TED spread is simply the difference between what banks and the U.S. Treasury pay to borrow money for three months. People use it to gauge fear and liquidity constraints in the North American credit market.

The TED spread reached an all-time high of 4.65% at the height of the credit crisis in October 2008. Its long-term average is about 1/2%.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2009/07/ted-spread-continues-to-fall.html

brought by Moishe Alexander, CFC canadian funding corp CEO

Moishe Alexander’s Review

Trois-Rivières, Quebec - Credit cloneofsnake, Flickr

The rental market eased slightly in the Trois-Rivières census metropolitan area (CMA). In fact, the vacancy rate reached 1.7 per cent this past October, compared to 1.5 per cent one year earlier. This very small increase in the vacancy rate for the CMA did not extend to all sectors, though, as conditions eased only in the North, Trois Rivières-Ouest, and Cap-de-la-Madeleine and Saint-Louis-de-France zones. The average rent for two-bedroom apartments in existing structures rose by 3.0 per cent. On average, tenants had to pay $505 to rent such a unit this fall, in comparison with $487 in October 2007.

Notice to readers

Starting this year, rental apartment structures serving senior clients exclusively will be excluded from the survey. For more information, see the Technical Notes section at the end of the report.

Trois-Rivières rental market eases slightly

The vacancy rate rose marginally this fall in the Trois-Rivières census metropolitan area (CMA). 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 1.7 per cent, compared to 1.5 per cent in the fall of 2007. This second rise in the vacancy rate in as many years has allowed the market to ease somewhat since reaching a low point in 2006. Even with these increases, though, it should be pointed out that the vacancy rate still remained relatively low, having stayed below the 2-per-cent mark for a sixth straight year. The situation in recent years contrasts with the conditions that prevailed in the late 1990s, when the vacancy rate was close to 8 per cent in the Trois- Rivières area. A sustained housing demand, combined with low rental housing construction volumes during the 1990s, has since progressively pushed down the proportion of unoccupied units. In the fall of 2008, there were consequently 273 vacant units out of a total stock of 15,920 apartments contained in privately initiated buildings with three or more housing units.

Strong migration maintains rental housing demand in Trois-Rivières

While the low vacancy rates that have been prevailing in the Trois- Rivières CMA for several years have greatly stimulated rental housing construction, the strong migration has kept demand for rental dwellings at high levels. In fact, since 2002- 2003, rental housing starts have virtually exploded (370 starts on average annually), significantly increasing the supply of units in the CMA. Over the same period, net migration in the Trois-Rivières area reached unprecedented levels (more than 500 newcomers per year since 2003), which put upward pressure on demand for rental housing. Trois-Rivières, like several other areas, must contend with an aging population and get more workers to take up the slack. The area has therefore introduced programs in the last few years to help welcome, and especially retain, international immigrants. These programs have obviously produced results, as evidenced by the high net migration levels recorded in the Trois-Rivières area since 2002. In fact, the international share of total net migration has now reached close to 40 per cent. As such, despite a job market that has been recording ups and downs since the beginning of the current decade, the Trois- Rivières area is effectively succeeding in attracting a large number of international migrants. Given that the increase in the supply of units has exceeded demand in the last two years, a slight easing of the market was felt. As the rise in supply slightly exceeded demand in the last two years, the market eased somewhat.

Elsewhere across the province

In October 2008, diverging trends were noted in Quebec’s six CMAs. While rental market conditions eased in the Sherbrooke and Trois- Rivières CMAs, the Gatineau, Québec, Montréal and Saguenay areas registered decreases in their vacancy rates. This fall, the Québec CMA had the lowest vacancy rate (0.6 per cent), followed by Saguenay (1.6 per cent), Trois-Rivières (1.7 per cent), Gatineau (1.9 per cent), Montréal (2.4 per cent) and Sherbrooke (2.8 per cent).

Market conditions tight in all sectors except Downtown and Bécancour

In the fall of 2008, the vacancy rate remained relatively low, that is, below 1.5 per cent, in most sectors of the CMA. Only the Downtown and Bécancour zones had less tight market conditions, with vacancy rates of 3.2 per cent and 5.2 per cent, respectively. As in previous years, these two zones had the highest vacancy rates in the CMA, the first, because this sector has the oldest rental housing stock in the area (70 years, on average) and, the second, on account of the fact that there are fewer services nearby (hospital, etc.).

Vacancy rate still low for apartments with two or three bedrooms and more

In October 2008, market conditions eased marginally for all apartment categories. Like in previous years, roomier apartments, that is, those with two bedrooms and those with three or more bedrooms, had the lowest vacancy rates, at 1.2 per cent and 1.4 per cent, respectively (compared to 2.3 per cent for one bedroom apartments and 4.3 per cent for bachelor units). These bigger apartments suit many people, especially students and families. They also provide tenants with more versatility, allowing them to use a room as a home office, for example. These larger apartments therefore target a broader client group and are usually easier to rent than smaller units. In 2008, market conditions eased the most for apartments with three or more bedrooms, as their vacancy rate rose from 0.8 per cent in October 2007 to 1.4 per cent a year later. The arrival of many units of this type on the market over the past year partly accounts for this increase.

Very few newer units vacant

While they command the highest rents, on average ($645), newer units, that is, those built in 2000 or later, had the lowest vacancy rate, at 0.5 per cent. These units seem to be preferred by tenants, who do not hesitate to pay a little more to get a unit in a recent building with contemporary features. Conversely, it can be noted that older apartments (built before 1960) registered the highest vacancy rate (2.8 per cent). These units are, to no great surprise, much more affordable, and by far, as they effectively rent for close to $200 less per month ($409).

Rent increases above inflation

The rent increases were significant in October 2008. In fact, the average rent for two-bedroom units rose from $487 in October 2007 to $505 in October of this year. The fact that the vacancy rate for two bedroom apartments remained low this fall partly accounts for this increase in the average rent. Not surprisingly, the North and Trois- Rivières-Ouest sectors had the highest average rents in October 2008, at $552 and $537, respectively (for two-bedroom apartments). Rental housing construction has been vigorous in recent years in these two zones. The arrival of new units, which usually command higher rents, pushed up the average rents in these geographic sectors. Conversely, the Downtown sector had the lowest average rent for two bedroom units this fall ($449), on account of the advanced age of the housing stock there. Contrary to what one might think, Figure 7 apartments in the highest rent ranges had the lowest proportions of vacant units. In fact, units commanding rents averaging at over $500 all registered vacancy rates below 1 per cent this fall. Since apartments in newer buildings post the highest rents, these results support the hypothesis that tenants are willing to pay more for units with modern features. In order to exclude the impact of new structures and conversions added to the universe between surveys and therefore get a better indication of the change in rents charged in existing structures, it is useful to analyze the change in rents using a fixed sample of existing buildings. Between October 2007 and October 2008, the average rent for two-bedroom apartments in existing structures rose by 3.0 percent.

Availability rate remains stable

The availability rate remained stable this fall, at 2.1 per cent. Taking into account not only vacant units but also units for which the existing tenant has given, or has received, notice to move, and a new tenant has not signed a lease, the availability rate gives a slightly broader idea of the short-term supply of unoccupied units. As was the case for the vacancy rates, the Downtown and Bécancour sector also had the highest availability rates in the fall of 2008, at 3.2 per cent and 5.2 per cent, respectively. All the other zones had availability rates below 3 per cent.

Vacancy rates stay high elsewhere in the Mauricie area

Elsewhere in the Mauricie area, the rental market tightened somewhat this fall in the agglomerations of La Tuque and Shawinigan. In fact, the proportion of vacant units in La Tuque reached 8.4 per cent in October 2008, down from the level recorded in 2007 (9.9 per cent). In Shawinigan, the vacancy rate fell marginally, to 5.4 per cent (versus 5.7 per cent a year earlier).

Vacancy rate expected to keep rising slightly

The significant rental housing construction in recent years will contribute to slightly driving up the vacancy rate in the Trois-Rivières CMA. In fact, since the beginning of the current decade, over 2,000 new rental housing units have been built, and activity will remain just as strong in 2008 and 2009 as in previous years. In addition, the slowdown in employment, which will continue until the end of 2009, should dampen demand for rental housing. However, despite the anticipated slight easing of the market, the vacancy rate will remain low, on account of a sustained demand for rental housing resulting mainly from the strong migration. The main driving force behind the rental market for the last several years in the Trois-Rivières area, migration will effectively continue to stimulate demand for rental housing from now until the end of 2009. Consequently, the supply of new units will contribute to pushing up the vacancy rate, but the strong migration will limit the increase, by putting upward pressure on demand for rental housing in the Trois-Rivières CMA in 2009.

You can find the entire report in PDF format through the following link:

http://www.cmhc-schl.gc.ca/odpub/esub/64463/64463_2008_A01.pdf