Posted by Moshe Alexander
Demand for rental apartments in both the Kitchener and Guelph CMAs decreased in October 2009. The average vacancy rate for privately- initiated rental apartments in the Kitchener CMA increased to 3.3 per cent from 1.8 per cent in October 2008. In the Guelph CMA, the vacancy rate rose to 4.1 per cent from 2.3 per cent last October.
A number of factors, both demographic and economic, contributed to the decreased demand for rental accommodations. These factors included renters moving to home ownership, higher unemployment and lower demand from young adults. Although the main reason vacancy rates were up was a decrease in demand, additional rental housing which was not completed in time to be included in the survey but was available for occupancy before the survey also had some impact.
Many first-time buyers made the move to home ownership and vacated their rental units in 2009. Mortgage rates decreased to their lowest level in more than 60 years. With the uncertainty in the economy, home price growth was limited. As a result, mortgage carrying costs became more affordable. First-time homebuyers who had remained on the sidelines in the final quarter of 2008 and the first quarter of 2009, propelled sales of existing homes to strong levels in the second and third quarters of 2009.
Employment in the Kitchener CMA for the first three quarters of 2009 declined by 1.4 per cent, or 3,600 jobs, compared to the same period in 2008. All of the jobs lost were full time. Unemployment increased across all age groups. The unemployment rate for youth jumped to 15 per cent. Those in the 15-24 age group typically rent. Consequently, many youth chose to remain at home or double up with other rental households, resulting in more vacant units.
In the Guelph CMA, employment decreased by 2,600 jobs, or 3.4 per cent. As in the Kitchener CMA, unemployment increased across all age groups. Some rental households doubled up or made alternative living arrangements. As a result, fewer rental units were occupied.