Moishe Alexander and Canadian Funding Corporation Review CMHC Reports

Posted by Moshe Alexander

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.

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Posted by Moshe Alexander

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.

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Posted by Moshe Alexander

Renters had an easier time finding rental accommodation in Vancouver this fall, compared to last year. Higher rental apartment vacancy rates have meant that renters have more choice. Although higher than last year, Vancouver’s vacancy rate is still below the national average and among the lowest in the country.

A slowdown in employment sent Vancouver’s rental apartment vacancy rate higher in 2009. The vacancy rate increased to 2.1 per cent, after sitting below one per cent for three consecutive years. Unemployment in the Vancouver Census Metropolitan Area (CMA) for the first ten months of 2009 increased to seven per cent from 4.3 per cent for the same period last year. Although employment has been gradually improving since the spring of this year, it has only been in the last couple months that full-time employment has grown.

A shift to homeownership also contributed to higher rental vacancy rates in 2009. A combination of low mortgage rates and home prices off their peak value has meant that monthly mortgage payments are lower. As of September 2009, the average monthly mortgage payment for an apartment condominium was approximately ten per cent less than it was one year ago3. Although the average mortgage payment is still higher than the average monthly rental payment, some renters have chosen to take this opportunity to enter homeownership.
Virtually all communities in the Metro Vancouver area saw an increase in vacancies in 2009. The only exception to this was the University Endowment Lands (UEL). The vacancy rate in the UEL, along with several areas of Vancouver City and North Vancouver, remained tight, below one per cent in October 2009.Vancouver City, with its educational infrastructure and job opportunities in the business centre, and the lifestyle communities of West Vancouver and White Rock recorded vacancy rates just over one per cent.Vacancies increased in all other municipalities, with suburban communities north of the Fraser River near three per cent, and communities south of the Fraser, in the 4-6 per cent range.

The rental availability rate4 for private rental apartments moved higher in 2009. The availability rate increased to 2.8 per cent in October 2009, from 1.1 per cent a year earlier. The vacancy rate for investor-owned rental condominiums increased in 2009, but to a lesser extent than that for purpose-built rental units. The rental condominium vacancy rate moved up to 1.7 per cent from 0.6 per cent last fall. The stock of rental condominiums is generally newer and features more amenities than their purpose-built rental counterparts. These benefits shore up demand for rental condominiums.

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