Canada's Housing Bubble

The average rental apartment vacancy rate in Calgary has risen from a year ago but rent has also declined, according to the spring Rental Market Survey released today by Canada Mortgage and Housing Corp.

Jul 26, 2010 Tamara Gignac Calgary Herald

Inner city hit hardest

Vacancy rates in Calgary continue to climb amid a weak job market and a population exodus not seen in the city for decades.

Some 17,000 dwellings sit empty -- including apartments, condos, homes and duplexes -- according to the 2010 civic census.

For the first time since 1992, more people moved out of the city than arrived here. That's helped push Calgary's overall vacancy rate to almost four per cent, up from just over three per cent in 2009.

In some inner-city neighbourhoods, more than 10 per cent of dwellings are unoccupied, including Sunalta and Bankview, which both lost several hundred residents between this April and last April, the census says.

It's a stark contrast to only a few years ago, when new migrants competed for scarce spaces and tenants resigned themselves to paying some of the highest monthly fees in the country.

During the height of the boom, rents increased by more than 15 per cent a year before levelling off as the recession hit.

It's a renter's market today -- no question, says one of the city's biggest residential landlords.

"Vacancy rates have gone up and rental rates have gone down," said David McIlveen, director of community development for Boardwalk Rental Communities.

"It's a great time to be a renter. It's more affordable than it's been in years."

Boardwalk continues to offer incentives to attract tenants.

"The rental rate in Calgary has probably gone down $50 to $100 (a month) on average. Landlords have to adjust -- it's better than having the units vacant," he said.

Indeed, recent statistics from the Canada Mortgage and Housing Corp. suggest the number of apartment vacancies in the city remains high.

In Calgary, the vacancy rate rose one percentage point in the spring to 5.3 per cent from a year earlier. The cost of a monthly two-bedroom suite averaged $1,082, a decrease of $24 year-over-year.

The good news for prospective tenants -- and post-secondary students looking for new digs in the fall -- is that even as demand for rental accommodations improves, as is expected in the coming months, landlords are unlikely to raise rents until at least until 2011.

The market has stabilized, but will take time to fully recover, said Gerry Baxter of the Calgary Residential Rental Association.

Even as the economy improves, the preference is to keep buildings full rather than lose money on empty suites, he noted.

"It all depends on the building, the location and the amenities. Most landlords have reduced their rents over the last year-and-a-half, anywhere from $100 to $200 a month. That's huge," said Baxter.

But as labour markets improve and the city sees net migration levels return to normal, the situation will probably change, cautions the CMHC.

Other factors, including a rise in interest rates and federal changes to mortgage qualification rules, are expected to fuel lower vacancy rates and higher rents.

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