January 13, 2009 — Moishe Alexander’s review on how the current world economy and Canadian economic down turn is affecting the Kelowna BC rental market
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