Recession and heavy regulation weigh heavily on Calgary and as it’s redirecting more people to the city’s rental market.
Albertan crude is oversupplied and undervalued and B-20 is making homeownership prohibitive. With up to 100,000 jobs on the line in the province, it’s no wonder Calgary’s rental vacancy rate has dropped.
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“In Calgary’s rental market, there’s significant tightening reflected in the vacancy rate, which dropped from 6.3% last year to 3.9% this year,” said James Cuddy, a senior analyst with the Canada Mortgage and Housing Corporation. “Supply has grown quite considerably; it grew 6.7% for condo rentals and 3.7% for purpose-built rentals.”
According to a CMHC rental report, rents in the city grew for the first time since 2014, increasing 1.7% year-over-year. Cuddy notes that, while rental supply in Calgary is strong, demand has outpaced it, and that’s partly the result of population growth.
“We’ve seen some population growth for 2018. Alberta has a resurgence of interprovincial migration,” he said. “The two-and-a-half years before 2018, there was an outflux of individuals, resulting from the oil shocks, but now there’s positive flow and it’s pushed demand for rentals.”
The effects of the past recession, not to mention current economic turbulence, have slowed recovery in the city, as reflected by waning housing affordability.
“Some are renting longer, waiting to move into homeownership until they’re ready for a down payment on a house,” said Cuddy. “Ultimately, the past recession and high unemployment have eroded some of the affordability.”
But according to Corinne Lyall, a sales representative with Royal LePage, these factors have created opportunity for investor-landlords.
“People are having a tough time qualifying with the new mortgage stress test, and there are new migrants to Calgary, who typically rent first,” she said. “That’s a positive for anybody looking to invest in the real estate market because this is a great opportunity for them to do it.”
Of course, being close to transportation or downtown will fetch higher rents, added Lyall.
“There’s a lot of choice in the condo market,” she said. “The attached market, like a side-by-side duplex is saturated right now. You can leverage the number of people as tenants in those properties.”
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