Renters are having an easier time finding accommodations in Victoria this year. A sluggish local economy and labour market, and a recent surge in homeownership has moved vacancy rates up. As the level of employment has edged lower, relatively fewer people have moved to the region. Historically low mortgage rates and lower home prices reduced monthly mortgage carrying costs, and encouraged some renters to exit the rental market in favour of homeownership. Near record levels of apartment condominium resales recorded across Greater Victoria during the second and third quarters of 2009 reflected this movement from rental to homeownership.

Vacancy rates for both apartments and town homes moved up in the Victoria CMA over the past year. The average apartment vacancy rate edged up to 1.4 per cent, following four years at 0.5 per cent. Similarly, the average vacancy rate for rental townhouses shifted up from 0.1 per cent last October, to 1.8 per cent in October 2009. The trend of increasing vacancies was widespread in the region. Higher vacancy rates were observed across all Greater Victoria municipalities. Both the one and two bedroom segments of the local apartment rental markets recorded increased vacancies. While apartment vacancy rates in Victoria increased in 2009, they remain low compared to other major British Columbia markets (2.1 per cent in the Vancouver CMA and 3.0 per cent in the Kelowna CMA) and the provincial average (2.8 per cent).1

Softer demand for rental housing in 2009 has put less upward pressure on rents. Average one and two bedroom apartment rents edged up 4.5 and five per cent in 2009, respectively.2 This growth was less robust than the 6.8 per cent average rent increase in 2008, when vacancy rates were at their lowest. A substantial range exists between the rents observed across Victoria CMA municipalities. For an average two- bedroom apartment, Oak Bay was home to the highest rents ($1,206), while the lowest rents were found in Esquimalt ($858). When compared to the provincial average, two-bedroom rents are on par, while average one- bedroom rents are eight per cent lower in Victoria.

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.