A number of factors have exerted upward pressure on Sudbury’s vacancy rate. Between October 2008 and October 2009, employment in the mining and related service sector has fallen. The challenges facing global demand for stainless steel have impacted Sudbury’s nickel industry and services related specifically to this sector. While the latest migration results (2007-2008) for Sudbury CMA showed positive net in-migration for the sixth consecutive year, it is more likely that in-migration slowed as well since last fall due to less investment spending in the mining industry. Some of these residents affected by the changing fortunes of the nickel market, may have left Sudbury to find work causing the vacancy rate to rise if they resided in rental housing. Meanwhile, a slowing job market triggered less renter household formation, particularly among the core renter group of young adults aged 18-24, resulting in more young adults remaining in the parental home.

Another factor dampening rental demand has been the shift to homeownership. An improvement of homeownership affordability caused by falling interest rates has prompted some renters to become homeowners over the past year. Although overall sales are lower, affordable priced product is moving well suggesting first time buyers are active.

With the total stock increasing only marginally over the course of the year, changes in the vacancy rate are attributable to changes in rental market demand, rather than fluctuations in supply. There is only a slight change in the rental universe observed between October 2008 and 2009 underlining the lack of new supply or changes to the stock of rental units (See Table 1.1.3). There have been only 58 rental completions in the last ten years according to CMHC’s survey in Greater Sudbury, with 31 coming last year. While the overall vacancy rate climbed to 2.9 per cent, both one bedroom and two bedroom units saw vacancy rates rise by a similar magnitude. Sudbury’s one bedroom stock saw its vacancy rate rise to 2.8 cent from 0.9 per cent while the two bed apartment stock jumped to 2.5 per cent compared to 0.4 per cent last year. Units in direct competition with homeownership saw an increase in vacancy rates as young couples and/or unattached singles move from rental units into homeownership or leave the community altogether.

As stock markets around the world have taken a fall with the economic recession, one market that remains strong is Israeli real estate. The Park Hyatt Hotel was host to Israeli real estate firms including Azorim, Gindi Holdings, Dimri Building & Development, Pollock Real Estate and Ashdar Building Company a few weeks ago when they flew into Toronto to deliver a presentation to potential investors.

It was the first time they’d done so directly, according to Ainnat Lifshitz, director of marketing and sales of Bayit4U, the company that coordinated the event. Alongside the real estate developers were bank representatives and lawyers who “give a panoramic view of Israel and cover all aspects of real estate,” she said.

Residential properties in Israel were under the spotlight as they’ve performed well in recent months. According to Lifshitz, demand for homes in Israel was up 14.6 percent in April 2009, compared to the same period in 2008.

http://www.canadasisrael.ca/2009/07/israeli-house-for-sale-in-toronto/

reviewed by Moishe Alexander, CFC canadian funding corp CEO

Moishe Alexander’s Review

Niagara Falls, Ontario - Credit Flickr Creative Commons

The apartment vacancy rate in the St. Catharines-Niagara Census Metropolitan Area (CMA) edged up to 4.3 per cent in 2008 from four percent in 2007. The vacancy rate reversed back to its 2006 level. Although the movement of renters into home ownership slowed, fewer youths entered the rental market leading to increase in vacancies. The vacancy rate will shift back to four per cent in 2009, as movement to home ownership slows.

Vacancy Rate Trends Up

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 provincial averages. According to the Fall 2008 Rental Market Survey conducted biannually by the Canada Mortgage and Housing Corporation (CMHC), the vacancy rate moved higher to 4.3 per cent in 2008 from four per cent last year and above the ten-year average level. Softer demand for rental apartments across almost all bedroom types contributed to the increase in the vacancy rate. Demographic and economic factors are the main drivers of rental demand. Niagara’s population has been declining since 2004 with the number of deaths exceeding and growing faster than the number of births. Moreover, the latest statistics show that there are nearly as many people leaving the region (mostly to other provinces) as there are moving into it (mostly international immigrants). This is in contrast to the positive contribution from migration to population growth the region had been experiencing in the decade prior to 2004.  Typically, international imigrants, who are the main driver of migration into the region in recent years, tend to rent a home when they first arrive. Later on, with better employment opportunities they decide to move into ownership. With fewer immigrants choosing Niagara as their new home, the demand for rental subsided. Overall, the negative population growth eased demand for rental accommodation in the region. A strong labour market supported the movement of renters into home ownership, however at a slower pace than in the past. According to the 2006 Census, the ownership rate in Niagara is 74.6 per cent, well above the national average rate of 68.4 per cent. Over the last 15 years, (i.e., the latest three census periods) the home ownership rate in the region gained more than three percentage points. Job growth during the January-September period of 2008 was 3.4 per cent from the same period last year. Job creation in service-producing sectors accounted for the major part of the employment growth. It is worth noting that employment grew strongly among young people aged 15-24, an age group which typically prefers renting. However, the employment growth has not translated into demand for rentals, as jobs were created only in part-time positions in the service sectors. On average, employment in the service industry doesn’t command as high a wage as a job in the goods-producing sector. Therefore, this didn’t lead to a push in demand for rental apartments. In general, there is a tendency for young people to stay longer in their parents’ home, since with a more competitive labour market they need to spend more time on education. There are other factors which affected the vacancy rate. While the number of purpose-built rental unit completions remained unchanged (67 units in the four quarters ending with the second quarter of both 2008 and 2007), the conversion of some units from rental to condominium caused the stock of rental accommodation to shrink by 0.7 per cent to 15,574. This reflects the fact that some property managers facing softer conditions in the rental market decided to convert their properties into ownership units. This helped limit the increase in the vacancy rate.

Vacancy Rates Increased for Apartments in Almost All Size Categories

Vacancy rates have gone up for all apartment types but 3-bedroom apartments. The vacancy rates for one- and two-bedroom apartments determined the direction of the overall vacancy rate since they account for almost 90 per cent of the total rental apartment universe. The vacancy rate for one-bedroom apartments (37 per cent of the universe) widened to 4.6 per cent from 3.9 per cent last year. Similarly, the vacancy rate for two-bedroom apartments (52 per cent of the universe) edged up to 4.1 per cent from 3.9 per cent.

Rents Increase Less Than Inflation

Despite weak demand for rental housing, average rents in Niagara continued to rise. The average rent for a two-bedroom apartment in the fixed sample, which focuses on the comparable units and excludes the impact of changes in the rental stock due to construction, demolition and conversions, increased 1.8 per cent between October 2007 and October 2008. This is slightly lower than the increase of 1.9 per cent a year earlier. Still, this increase was above the Residential Tenancies Act Guideline for 2008 of 1.4 per cent. The increase in rents was less than the year-overyear inflation rate of 2.6 per cent.

Weaker Demand for Some Services Drives Up Vacancies in Niagara Falls

Although the overall vacancy rate moved higher, the vacancy rates varied across the seven zones in which Niagara is divided for rental market survey purposes. The vacancy rates increased in three zones and decreased in the other four. The largest increase, from 2.5 per cent in 2007 to 5.9 per cent in 2008, occurred in the vacancy rate for the core of the City of Niagara Falls (Zone 3). This vacancy rate was the highest among the seven zones and was the same as the Zone 3 vacancy rate in 2006. This market is dependent on tourism and ancillary services and the decrease in the number of customers at gambling facilities led to a reduction of the workforce in the information, culture and recreation services industry. This in turn reduced rental demand and pulled the rate back to the high levels which are usual in this zone. An increase in the vacancy rate in Zone 2 (non-core area of the City of St.Catharines) from 2.7 per cent in 2007 to 4.7 per cent this year has also contributed to the overall increase in Niagara’s vacancy rate, as almost a third of the total rental stock is located here.

Vacancy Rates High in Older Buildings and for Low-Rent Apartments

Despite their lower rents, the vacancy rate was higher in relatively older buildings. Compared to the previous year, the vacancy rate has gone up in buildings constructed before 1974. Newer buildings, especially those built after 1990, benefited from a decline in the vacancy rate. Since around 41 per cent of the total rental stock was built between 1960 and 1974 period, the increase in the vacancy rate in buildings constructed during that period from 3.6 per cent last year to 4.8 per cent in 2008 lifted the overall average vacancy rate higher. Although the rents in larger buildings are relatively higher, renters prefer large buildings, as the availability of amenities makes them more attractive. The vacancy rate in buildings with over 100 apartments was the lowest at 2.4 per cent. About 20 per cent of apartments are in buildings with at least 100 units. The vacancy rates for higher-rent units (those between $800-899, and above $900) were relatively lower compared to less expensive units. Yet, the vacancy rate increased for expensive rental units (above $900) from 1.5 per cent in 2008 to 3.3 per cent. As this rent range competes with homes with modest prices, some renters opt for homeo wnership rather than paying a high rent.

Townhouse Vacancy Rate Higher Too

Rental townhouse (row) vacancy rates also increased, to 5.8 per cent in 2008 from 5.1 per cent a year ago. The same factors raising apartment vacancy rates were at play here. Further movement into home ownership eased the vacancy rate in townhouses. At 848 units, they account for only around 5 per cent of the rental stock.

Availability Up in Tandem with Vacancies

Rental availability rate provides a broader supply measure of what a landlord has available to market to prospective tenants than does the vacancy rate. The availability rate measures the combined incidence of vacant units, as well as units where the existing tenant has given notice to move but has not yet vacated the unit and the landlord has not yet found a replacement. Consistent with the vacancy rate, the availability rate in Niagara trended higher in 2008. According to CMHC’s Rental Market Survey, 6.8 per cent of rental apartments were considered available for renting in October 2008, up from 5.7 per cent last year.

Affordability Slightly Lower

The rental affordability indicator is a gauge of how affordable a rental market is for those households who rent within that market. A generally accepted rule of thumb for affordability is that a household should spend less than 30 per cent of its gross income on housing. 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 re-quired 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. According to CMHC’s new rental affordability indicator, affordability in Niagara’s rental market weakened slightly in 2008. The cost of renting a median priced two-bedroom apartment increased by 2.2 per cent, while the median income of renter households improved by only 0.5 per cent. The rental affordability indicator in Niagara stands at 102 in 2008, down from 104 the previous year.

Rental Market Outlook

The private apartment vacancy rate in Niagara is expected to slightly tighten reto four per cent in 2009. The expected slowdown in the economy coupled with announced lay-offs will limit income growth, implying fewer people will move into home ownership. Demographic trends will continue to have an important impact on the rental market. The aging of the population suggests demand for rental will increase. Senior households are expected to continue to move back into rental as their children leave home, since this is more convenient as they will no longer be responsible for maintenance and they will obtain equity cash to supplement their old age income. Also, rental buildings are typically located closer to necessary amenities such as medical assistance and transportation. An expected rebound in the number of international migrants who will come to live in Niagara will also raise demand for rentals.

You can find the entire report in PDF format through the following link:

http://www.cmhc-schl.gc.ca/odpub/esub/64451/64451_2008_A01.pdf

Kelowna, BC - Credit keepitsurreal, Flickr

The Kelowna BC rental market has the lowest apartment vacancy rate at 0.3% 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 0.3%.

It is desperate times for tenants in the city of Kelowna, British Columbia. In fact it is now a housing crisis.

POPULATION GROWTH FUELS DEMAND

The Canada Mortgage and Housing Corporation reported that the Kelowna area of BC is experiencing an increased amount of migration, which is putting more demands on the rental housing stock. Much of this is contributing to the demand by the significant new jobs that are being created in the high-tech, trade, health care, personal and other service related industry sectors. As well as a large post secondary population in the area. These statements and figures come from the rental market report issued in 2008 by Canada Mortgage and Housing Corporation.

STOCK OF PURPOSE-BUILT RENTAL UNITS DECLINES

According to Canada Mortgage and Housing Corporation, despite the extreme demand for rental housing in Kelowna BC, only 164 purpose built rental starts occurred in Kelowna for the first 10 months of 2008. This has caused a panic for tenants and an extreme appreciation of condominium prices in Kelowna BC.

SECONDAY RENTAL MARKET BECOMING INCREASINGLY IMPORTANT

The Canada Mortgage and Housing Corporation report states that since there is limited stock of purposed-built rental units in Kelowna BC, a strong demand has occurred for rental units to be created by home owners, which is called the “secondary rental market”. Pressure is being excreted on the local municipality cities to relax their zoning and building codes to permit additional secondary rental units in private homes.

RENT INCREASE

The Canada Mortgage and Housing Corporation report states that last fall in Kelowna BC a one bedroom apartment that used to rent for $825.00 is now renting for $1065.00 compared to the same period last year. A two bedroom units that rented last year for $766.00 are now renting for $984.00, which is approximately 25% increase.

Government sources say that with this increase cost, welfare recipients are hard pressed to rent anything in Kelowna BC.

VACANCY RATES WILL REMAIN LOW IN 2009

Canada Mortgage and Housing Corporation is projecting that vacancy rates in Kelowna BC 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 Kelowna BC for the period ending 2009 will be 0.1%, which is an astonishing low vacancy rate.

RENTAL AFFORDABILITY INDICATOR

Canada Mortgage and Housing Corporation affordability indicator 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 Kelowna 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/64395/64395_2008_A01.pdf