Posted by Moshe Alexander
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.