The Barrie CMA rental market experienced softer conditions in 2009. The average vacancy rate for purpose- built rental apartments rose up by 0.3 percentage points this year to 3.8 percent. Several factors contributed to easing demand, including a rebound in homeownership demand and high youth unemployment. Continued moderate migration into Barrie supported demand.

Supply, also, was virtually unchanged, increasing by only 15 units. There were no new purpose-built apartments, but the number of units in the existing universe increased for a variety of reasons.

With a softer rental market the growth in average monthly rent for a two-bedroom unit slowed significantly from last year and came in at 1.2 per cent, well the below the maximum rent increase stipulated by the province.

The economic adjustment has affected employment prospects in Barrie for all age cohorts, but in particular the youngest age cohort of 15-24. This group makes up a significant proportion of Barrie’s labour force, given the region’s overall young population and is also a key source of rental demand. The proportion of the labour force in Barrie made up by the 15-24 year-old age group this year has averaged close to 20 per cent. Both full-time employment and part-time employment for this age group have been trending down. With a slowly recovering economy, young people who had been renting returned to the parental home or doubled up with other youth, while those currently living with parents are staying at home until the economy recovers further.

The rate of migration into Barrie has slowed. Nevertheless migration into Barrie from within Ontario is higher than it is in most other Ontario centres. Moveover, slightly fewer people are moving away from Barrie to other parts of the country. Immigration and births added to the slower, but still significant, population growth rate. A growing and relatively young population continues to support rental demand.

With mortgage carrying costs down due to record-low mortgage rates, first-time buyers have exited rental into homeownership thereby increasing the overall vacancy rate.

The decline in mortgage rates in 2009 put mortgage carrying costs back to where they were in 2006. These payments hit a low in the second quarter, which coincided with an improvement in the employment prospects for the 25-44 year old age group. This is the same age group from which many first-time buyers are drawn, so the surge in existing home sales beginning in the second quarter likely included many purchases by people who were renting at the time.

Renters who move into homeownership usually have relatively high incomes compared to other renters and often occupy the larger, more expensive rental accommodation before their move. Given the significance of the secondary rental market in Barrie, in particular, the number of rented single-detached homes, a number of first-time buyers would be coming from the secondary rental market. As a result, the movement to home ownership in Barrie resulted in a relatively small increase in the primary rental market vacancy rate since some the impact was absorbed in the secondary rental market.

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.

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.

The slackness in the resale market coupled with the slowing economy will directly impact the new home market. Single-detached starts will fall to 190 units in 2009 and 180 in 2010, as the market comes more into line with long-term demographic requirements. CMHC expects 210 row, condominium and apartment starts in 2009 and another 160 in 2010.

After rising 4.3 per cent and 5.5 per cent respectively in 2007 and 2008, the New Home Price Index for Sudbury-Thunder Bay will rise in 2009 and 2010 but only modestly given the slowdown in demand.

Developers have plans for condominium development in 2010. Pricing will be very important as this product is primarily targeted at empty nesters who do not typically want to pay more for a condo that what they obtain from the sale of a homeownership unit.

As is well known, the vacancy rate has fallen from a peak of 11.1 per cent in 1999. A tight market partially brought on by a lack of new rental construction and demand pressure has finally resulted in some development of rental housing in Greater Sudbury. Vacancy rates rose slightly in April and will also increase this October before falling again to 1.3 per cent in 2010 as the economy begins improving. Strong enrolment figures at the three Sudbury-based post-secondary institutions will contribute to the tight market conditions. Rents should continue to escalate in 2009 and 2010 given continued strong demand for rental accommodation.

After plateauing in 2006-2007, Sudbury sales fell 13 per cent in 2008 and have fallen a further 26 per cent to the end of September. Sales will certainly continue this downward trend in 2009. Given the buyer’s market conditions, CMHC estimates a 27 per cent drop in existing home transactions when the year is complete. Sales will drop a further six per cent in 2010 as the market moves towards a balanced position.

The sale to new listings ratio, an indicator of the existing home market behaviour, is improving. After growing in the third quarter, Sudbury’s market will keep an upward trend, increasing its temperature. CMHC expects this ratio to end the year approaching 50 per cent, indicating that prices will adjust all the way into next year.

According to local sources, demand is greatest in the price ranges under 200,000 while the upper end of the market (>$400.000) has not been greatly affected. Prices have been falling since mid-year 2008 after rising to unsustainably high levels over the prior four years. The price decrease will continue into 2010 but will be tempered by falling listings. Watch for average prices to fall 5.5 per cent in 2009 and level off in 2010.

Given the adjustment in home prices, there has been improvement in required income to purchase a home. Unfortunately, with the slowing economy, the adjustment to incomes has been stronger. As a result the net impact on affordability will decrease somewhat in 2010 after improving in 2009. Nonetheless, there are buyers in the market searching for lower priced homes.

Greater Sudbury has experienced a strike at Vale Inco, one of the biggest mining companies in the community. Consequently employment will decline 1.2 per cent in 2009 and recover only slightly, 0.5 per cent in 2010. The combination of job loss and labour force growth have caused the unemployment rate to head north, and will approach on average nine per cent this year and next.

After an increase of nearly nine per cent in 2008, average weekly earnings will drop this year declining three per cent and fall a more modest 0.5 per cent in 2010. Removing a relatively high proportion of mining and mining- related incomes from the mix would have had a downward impact on average weekly earnings over the course of this year.

In the short term local economic uncertainty will impact housing demand. However, the current commodity price rebound will form a solid long term foundation for growth in the broader Sudbury economy. Despite the current weakness in the Sudbury economy, some economic development plans are still moving ahead.

Migration has been positive of late, while natural increase is trending down. In-migration will trend downward in 2009 and 2010 prior to recovery in 2011. Mining workers affected by work stoppages may contemplate relocating if the national economy begins to improve, generating opportunities elsewhere.

The Bank of Canada cut the Target for the Overnight Rate in the early months of 2009. The rate was 1.50 per cent at the start of 2009 and has since fallen to 0.25 per cent. The Bank has committed to keeping this rate at 0.25 per cent through the middle of 2010 unless inflationary pressures warrant an increase.

Mortgage rates have fallen over the course of 2009, but are now expected to remain relatively stable for the rest of the year. Posted mortgage rates will gradually increase through 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate will be in the 3.50-4.25 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.50-6.00 per cent range.

Provincially, the labour force and employment are expected to rise moderately in 2010, while in Halifax, growth is expected to be more significant. Halifax will continue to see steady growth in the economy and this will translate into improving conditions in the local housing market.

The local economy in Halifax continues to benefit from positive migration patterns. With more people moving to Halifax than moving away, the labour force has been growing. Almost every month of 2009 saw greater numbers of people looking for work in Halifax and by the summer months there were more people looking for work than ever before. Fortunately, most of these job seekers found employment which resulted in a record level of employment in Halifax. Employment was up by three to four per cent in 2009 compared to 2008. Employment may ease off of record highs during certain months in the forecast period, however overall employment is expected to continue to show positive growth in 2010.

Employment is being bolstered by the construction industry and the public sector. Large construction projects and large military contracts have contributed to strength in these industries. The largest employment sector in Halifax is the services sector which has seen slow but steady growth of approximately three per cent so far in 2009. The opening of some new or trendy retail stores has contributed to the growth in this sector. Areas experiencing weakness are the finance, trade and primary goods sectors which are struggling due to global economic issues and reduced demand for exports. Wages are also expected to continue to move upwards. As of August 2009, seasonally adjusted average weekly earnings have risen by over six per cent compared to the 2008 average. Average earnings now exceed $39,000 per year compared to just under $37,000 in 2008.

Record employment levels and wages  will be supportive of housing activity in Halifax for the remainder of 2009 and 2010. Continued in-migration and near historic low interest rates will also contribute to increased housing demand in the Halifax Regional Municipality (HRM). In the near-term, some lingering effects of the weakened economy will keep demand subdued. In the medium- term, however, expect to see demand and activity begin to increase again in 2010.

The Bank of Canada cut the Target for the Overnight Rate in the early months of 2009. The rate was 1.50 per cent at the start of 2009 and has since fallen to 0.25 per cent. The Bank has committed to keeping this rate at 0.25 per cent through the middle of 2010 unless inflationary pressures warrant an increase.

Mortgage rates have fallen over the course of 2009, but are now expected to remain relatively stable for the rest of the year. Posted mortgage rates will gradually increase through 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate will be in the 3.50-4.25 per cent range, while three and five-year posted mortgage rates are forecast to be in the 4.50-6.00 per cent range

Home sales will continue at a brisk pace through the remainder of this year and into 2010. More sales combined with fewer active listings will push the average MLS® home price higher in 2010.

Home starts will pick up over the next 15 months, but remain below levels recorded in recent years. The upturn in the resale market will contribute to an increase in home starts as builders see demand returning to the market. New and resale home inventories are being absorbed, providing an incentive to start new residential projects.

Steady population growth through migration, an improving job market and low mortgage rates will provide support for homeownership demand through 2010.

Housing market conditions in Greater Vancouver1 will favour home sellers into the first half of next year. The recovery of home sales that began during the spring and summer months will continue into 2010. Home sales ramped up during the past few months due to lower home prices and low mortgage rates. These two factorscombined with increasing real wages, have meant improved affordability for home buyers. While home prices are rising, continued low mortgage rates into mid 2010 will keep home buyers active. Home sales in the first few months of 2010 may be below average, as transportation route changes associated with the Olympic Games hamper mobility.

The number of active resale listings will be near the five-year average level next year. After peaking in fall 2008, active listings have trended lower. While the flow of new listings entering the market has been increasing, high sales levels have kept the total stock of active listings dwindling in recent months. The recent upturn in home prices may draw more sellers to the marketincreasing the supply of homes for sale. Look for more balanced market conditions to prevail in the second half of 2010.
Home prices in most Vancouver

municipalities will continue to trend up in 2010, but at a modest pace of two to four per cent. Home prices hit their lowest point in March of 2009, having fallen 17 per cent from their peak level. In just six months, thaverage price in Greater Vancouver saapproximately two per cent below thpeak value. However, the recovery in home prices has been uneven across the region. While prices in the City of Vancouver have already surpassed the previous peak, prices in other centres remain well below peak levels(see figure 2). These centres with prices still below peak, will see prices trending up over the next 15 months, as buyers take advantage of lower prices and favourable mortgage interest rates.

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

Moishe Alexander’s Review

Highlights

Barrie, Ontario - Credit Ken Lund, Flickr

Moishe Alexander says that the overall vacancy rate has increased slightly from 3.2 per cent last year to 3.5 per cent this year. A moderating economy and less full-time youth employment led to increased vacancies. The rental market is expected to continue easing. The vacancy rate will increase to 3.8 per cent next year and the average monthly rent for a two-bedroom apartment will inch higher to $968.

Overall Rental Market Softens

Moishe Alexander says that the overall vacancy rate for apartments has gone up slightly from last year, with the increase driven by higher vacancies among the two-bedroom units. A slowing economy coupled with less migration of newcomers into Barrie, and fewer households moving from renting to home ownership caused the area’s rental market to soften.

Rental Demand Slows – Youth Employment Gains Mainly Part-time

Moishe Alexander says that after a sustained period of growth, employment in Barrie is starting to decline, as the decrease in full-time employment has more than offset any gains in part-time employment.

For the 15-24 age groups, the decline in full-time employment was marginal and was more than offset by growth to part-time employment, bringing overall employment above last year’s level. However, part-time employment is not as stable or financially rewarding as full-time employment. Therefore, fewer youth are choosing to enter the rental market.

Demographics Less Supportive of Current Rental Demand

Moishe Alexander says that according to the 2006 Census, the Barrie Census Metropolitan Area (CMA) has a higher proportion of people under the age of 24 relative to Ontario, over 34 per cent and just under 32 per cent respectively. This is a sizeable group for future rental demand in Barrie. However the proportion of young people between the ages of 15 and 24 in Barrie is only slightly above the same proportion in Ontario (13.6 per cent to 13.4 percent), and the 20-24 age group is smaller (6.3 per cent compared to 6.6 per cent in Ontario). This is a key group for the rental market as it signifies the point in life associated with youth moving out of their parents’ homes and into their first rental unit. The relatively smaller size of this group is contributing to the slowdown in the number of new entrants into the rental market.

Migration Eases

Moishe Alexander says that migration of people into Barrie has been one of the factors for the prolonged economic and housing market growth in the region. However migration has slowed, and with fewer people coming into Barrie, demand for rental units has moderated. The number of people new to Barrie has dropped to about 5,500 this year and will stay at the same level next year. This is a sizeable decrease from the over 10,000 people who arrived in 2000, and is a factor contributing to higher vacancy rates.

Movement From Renting To Owning

Moishe Alexander says that the Barrie rent-to-mortgage carrying cost-ratio averaged about 69 percent this year and last. Although this is down from over 100 several years ago, it is still higher than the average for Ontario which is about 60 percent. Higher ratios reflect market conditions which give renters an incentive to become home owners. Barrie’s housing market, both rental and ownership, had been tight enough over the last few years that the relative closeness of monthly rental costs and monthly mortgage costs enticed many to exit the rental market and purchase a home. Given the economic uncertainty and high prices, fewer households continue to enter the home ownership market, both new and existing. This would reduce the vacancy rate but this trend has been more than offset by the employment and migration trends already noted.

Large Buildings Popular

Moishe Alexander says that the increase in the overall vacancy rate from 3.2 per cent to 3.5 percent reflected increases for most mid-size buildings. However, the vacancy rate for buildings with 100 units or more dropped sharply from 1.3 per cent to 0.3 per cent. The larger buildings tend to be more popular because they may offer more amenities and often are located closer to the city core. The largest buildings also charged the highest rents, underscoring their popularity.

Availability Up

Moishe Alexander says that the availability rate, a measure indicating what is on offer on the market (both currently vacant and soon-to be vacant), has gone up by close to two percentage points from last year. The majority of the growth in the overall availability rate came because of increases in the rates of both two bedroom and three bedroom units, with the most growth in the two-bedroom unit rate.

Rents Rising Faster Than Inflation

Moishe Alexander says that the percentage change of average rents from a fixed sample is a measure that estimates the rent movement due to changes in market conditions. The estimate is based on structures that were common to the survey sample for both 2007 and 2008 Fall Rental Market Surveys. Despite the increase in the vacancy rate, the average increase for apartment rents was 4.4 per cent. On a per type basis bachelor, one-bedroom and two-bedroom units had significant increases above the rate of inflation, which drove the overall rent up.

Secondary Rental Market Expands

Moishe Alexander says that the stock of secondary rental housing increased significantly from last year. The majority of this growth was due to a strong increase in the number of single-detached homes put on the market for rental purposes. Furthermore, while the share of secondary rental units decreased for all other dwelling types, the share of single-detached homes increased substantially. Overall, the average rent in the secondary market was up significantly. Single-detached, semi-detached, row houses, and duplexes accounted for the marked average rent increase, while the average rent for accessory suites was lower. Because their rents are the highest, the increase in the share of single-detached houses in the secondary rental market pulled up the average rent in this market. Given the region’s preference for low density housing, some people not ready to enter the home ownership market but looking for similar types of housing are moving to the secondary market. This choice is supported by the fact that rent levels are similar to those in the purpose-built market.

Rental Market Outlook

Moishe Alexander says that given the moderation of the economy, which will not begin to improve until late next year, the sluggishness in the region’s rental market will continue into next year. The vacancy rate will increase from 3.5 per cent to 3.8 per cent next year. A significant increase in supply will be the main factor pushing up the vacancy rate. The average rent for a two-bedroom apartment will continue to increase, albeit by less than the rate of inflation, given the slowing demand. The average two-bedroom apartment rent will be $968 per month, up slightly from the current $954.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/65772/65772_2008_A01.pdf

Sudbury, Ontario - Credit Habi, Flickr

The Sudbury Ontario rental market has one of the lowest apartment vacancy rate at 0.7% in the country. In fact, the rental town house vacancy rate dropped substantially to 0.2% for 2008. These two figures together leave a net vacancy rate of 0.6%.

It is desperate times for tenants in Sudbury Ontario to find any proper rental accommodations, as there are line-ups at landlord’s offices.

VACANCIES EDGE UP , BUT SUDBURY MARKET STILL TIGHT

The Canada Mortgage and Housing Corporation reported that Sudbury Ontario is experiencing an increase need for rental housing in all sectors. Much of this is contributing to the demand by the significant post secondary population in the area along with a strong local labor market, especially in mining. These statements and figures come from the rental market report issued in 2008 by Canada Mortgage and Housing Corporation. More than 50,000 people (net migration) moved to Sudbury Ontario last year from other provinces and countries putting additional stress on an already stressed out rental housing market.

VERY LITTLE NEW SUPPLY OF PURPOSE-BUILT RENTAL UNITS OR ANY HIGH RISE RENTAL UNITS

According to Canada Mortgage and Housing Corporation, despite the extreme demand for rental housing in Sudbury Ontario, only 16 purpose-built rental starts occurred in Sudbury and surrounding areas for the first 10 months of 2008. This is caused a panic for tenants and an extreme appreciation in value for single detached homes in Sudbury Ontario.

SEVERAL REASONS FOR CONTINUED LOW VACANCY RATE

The Canada Mortgage and Housing Corporation report states that many factors have combined to keep greater Sudbury vacancies low. Even though there has been falling commodity prices for iron or the mining sector, it has kept demand solid for rental accommodations. Migration continues into the region, attracted by the jobs, post secondary school opportunities, and retirement living. Sudbury boasts the science north attraction and all main hospitals for Northern Ontario that are fully operational are situated in Sudbury.

CONTINUES STRONG RENT INCREASES

The Canada Mortgage and Housing Corporation report states that last fall in Sudbury Ontario, a one-bedroom apartment that used to rent for $782.00, plus utilities is now renting for $850.00, plus utilities, compared to the same period last year. A two-bedroom unit that rented last year for $950.00, plus utilities, is now renting for $1,050.00, which is approximately a 20% increase.

Government sources say that with this increase cost, welfare recipients are hard pressed to rent anything in Sudbury Ontario. Tight vacancy rates in this area of the province have caused rents to increase substantially for the same period last year. However, rent increases in purpose-built apartment rent units were moderate in most areas of the city including Chelmsford and Minnow Lake.

SUDBURY VACANCIES RESUME DOWNWARD DECENT

Canada Mortgage and Housing Corporation is projecting that vacancy rates in Sudbury Ontario and surrounding areas, will remain the lowest in the country in 2009. Mainly due to non-construction of rental units and a significant increase in migration. In fact, Canada Mortgage and Housing Corporation is predicting that the vacancy rate in Sudbury Ontario and surrounding areas for the period ending 2009, will be 0.07%, which is a phenomenal vacancy rate.

SUDBURY’S RENTAL AFFORDABILITY INDICATOR

Canada Mortgage and Housing Corporation affordability indicator will decline to 74 by year-end 2008, which 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 Vancouver and Abbotsford 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/65780/65780_2008_A01.pdf

Winnipeg, Manitoba - Credit Daryl Mitchell, Flickr

The Winnipeg Manitoba rental market has one of the lowest apartment vacancy rates at 1.0% in the country. In fact, the rental town house vacancy rate dropped substantially from 2.6% to 2.2% for 2008. These two figures together leave a net vacancy rate of 1.0%.

Moishe Alexander states that it is tough times for tenants in Winnipeg Manitoba to find any proper rental accommodations, as there are line-ups at the Property Managements offices.

AVAILABILITY RATE DECLINES ALONGSIDE VACANCY RATE

The Canada Mortgage and Housing Corporation reported that Winnipeg Manitoba is experiencing an availability increase for rental housing in all sectors. Much of this is contributing to the demand by the significant post secondary population in the area along with a strong local labor market, especially high-tech jobs. These statements and figures come from the rental market report issued in 2008 by Canada Mortgage and Housing Corporation. More than 12,000 people (net migration) moved to Winnipeg Manitoba last year from other provinces and countries putting additional stress on an already stressed out rental housing market.

VERY LITTLE NEW SUPPLY OF PURPOSE-BUILT RENTAL UNITS OR ANY HIGH RISE RENTAL UNITS IS AFFECTING THE VACANCY RATE

According to Canada Mortgage and Housing Corporation, despite the extreme demand for rental housing in Winnipeg Manitoba, only 68 purpose-built rental starts occurred in Winnipeg Manitoba and surrounding areas for the first 10 months of 2008. This has caused a panic for tenants and an extreme appreciation in value for single detached homes in Winnipeg Manitoba.

SEVERAL REASONS FOR CONTINUED LOW VACANCY RATE

The Canada Mortgage and Housing Corporation report states that many factors have combined to keep Winnipeg Manitoba vacancies low. Even though there has been falling commodity prices for iron or the mining sector, it has kept demand solid for rental accommodations. Migration continues into the region, attracted by the jobs, post secondary school opportunities, and retirement living. Winnipeg Manitoba boasts substantial investments in the high-tech consumer industry and all main hospitals for Manitoba that are fully operational, are situated in Winnipeg.

RENTS CONTINUE TO INCREASE

The Canada Mortgage and Housing Corporation report states that last fall in Winnipeg Manitoba, a one-bedroom apartment that used to rent for $740.00, plus utilities, is now renting for $769.00, plus utilities, compared to the same period last year. A two-bedroom unit that rented last year for $475.00, plus utilities, is now renting for $745.00, which is approximately a 45% increase.

Government sources say that with this increase cost, welfare recipients are starting to be hard pressed to rent anything in Winnipeg or surrounding areas, except in the Lord Selkirk area. Tight vacancy rates in this area of the province have caused rents to increase substantially for the same period last year. However, rent increases in purpose-built apartment rent units were moderate in most areas of the city including Lord Selkirk and Fort Garry.

VACANCY RATE DECREASES IN ROW RENTALS

Canada Mortgage and Housing Corporation is projecting that vacancy rates in Winnipeg Manitoba and surrounding areas in row rentals will remain the lowest in the country in 2009. Mainly due to non-construction of rental units and a significant increase in migration. In fact, Canada Mortgage and Housing Corporation is predicting that the vacancy rate in Winnipeg Manitoba and surrounding areas will decrease from 2.6% to 1.5% for the period ending 2009.

WINNIPEG’S RENTAL AFFORDABILITY INDICATOR

Canada Mortgage and Housing Corporation affordability indicator will decline to 105 by year-end 2008, which indicates that the value of 100 suggests that 40% 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 Vancouver and Abbotsford 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/64479/64479_2008_A01.pdf