Posted by Moshe Alexander
The vacancy rate among apartments with at least three units (3+) in the Thunder Bay Census Metropolitan Area (CMA) inched up to 2.3 per cent in October 2009, from 2.2 per cent last year, according to Rental Market Survey (RMS) data released in December by Canada Mortgage and Housing Corporation (CMHC). (See Table 1.1.1) With the October vacancy rate’s slight increase, Thunder Bay now becomes the CMA with the tenth lowest vacancy rate for 33 centres with populations over 100,000 in Canada. Northern Ontario’s other major centre, Sudbury saw its rate rise to 2.9 per cent from 0.7 per cent last year. Meanwhile, elsewhere in Northwestern Ontario, Kenora’s vacancy rate declined to 0.8 per cent from 1.7 per cent in October 2008.
The vacancy rate in Thunder Bay was up only slightly this year as several opposing forces came into play. Improvement in homeownership affordability caused by falling interest rates has encouraged some renters to become homeowners. Low ownership costs in Thunder Bay combined with rising apartment rents reduced the relative cost of homeownership – dampening demand for rental accommodation. There are other factors that have added to rental demand and exerted downward pressure on vacancy rates. Although there has been a long-term out-migration amongst the 18 to 24 renter aged group, important trends emerged recently. Employment in the service sector and 18-24 age groups have held up reasonably well, possibly exerting slight upward pressure on rental demand, as young adults are more likely to rent rather than own. Overall, employment has fallen 5.5 per cent over the past year between the 2008 and 2009 surveys. However, the brunt of the job losses has been in the goods-producing sector and the 25-44 age group, arguably sectors not directly associated with rental demand. Next, demand coming from students in post-secondary institutions has increased rental demand. Enrolment in post-secondary institutions has been growing in Thunder Bay. Less space in student housing has caused spillover in the private market creating demand for units located in proximity to Lakehead University and Confederation College. Laid off workers returning to school as mature students are creating additional demand for private rentals. In addition, recent data has indicated no new sources of rental supply. Going back to 1998, there have been few rental completions added to the supply of rental units in Thunder Bay.
The availability rate1 is a slightly broader measure of what landlords have available to market to prospective tenants. The availability rate refers to the percentage of apartments that are either vacant or for which the existing tenant has given or received notice to move. Once again, availability rates moved in the same direction as the vacancy rate in Thunder Bay. Thunder Bay’s availability rate rose to 3.1 per cent from 2.7 per cent in 2008. Only one of the 15 metropolitan areas in Ontario had a lower availability rate than Thunder Bay, namely Kingston (2.5 per cent). Higher availability rates are a result of higher turnover. (See Table 1.4.)
