Category Archives: Renting

Bad news for renters

NenshiMayor Nenshi predicts the rental vacancy rate could come close to zero

This is not just bad for renters, but I also believe it’s bad news for Calgary in general. If people can’t find suitable, affordable accommodation, we’ll soon see a lot of negative fallout such as higher prices for home buyers, an exodus of people for more affordable locations, lower in-migration, students without accommodation, and a flood of pets at the animal shelters.

From the Calgary Herald: Calgary and Edmonton had the lowest vacancy rate of any major Canadian city in April, at 1.2 per cent, according to the Canada Mortgage and Housing Corp. Calgary rents jumped by more than seven per cent over a 12-month period, the biggest annual rise in Canada, as the average rent for a two-bedroom apartment reached a record $1,202, CMHC reported.

Tammy Panchuk, who owns 40 rental units with her husband, said they don’t have any vacancies now, and when there are openings they advertise on only one website because the inquiries become “overwhelming.”

Calgary is now among the fastest-growing cities in North America, according to new civic census data released this week, and Panchuk expects the narrowing rental market will force many would-be renters to buy instead.

“I deal with a handful of investors,” the Calgary real estate agent said, “and none of them have any vacancies whatsoever, and if they do they are snatched up just like that.”

If we had the lowest vacancy rate in April, I shudder to think what it will be now, after the flood. Read more Rental market worries rise in Calgary

The Calgary housing market is all sweetness and light

Welcome back!

Sunshine, lollipops, and puppy dogs can also be added to the basket of good things which we have in Calgary. Unlike the craziness which has befallen the real estate market in Vancouver, we have stability in the world’s fifth most liveable city. If you believe the Toronto Board of Trade, Calgary is the best city on the planet. Let’s hope that Garth Turner’s recent visit here did not infect us with the Toronto disease of negativity and defeatism. It appears that no amount of loathing from the likes of jealous Ontarians will have any effect on our terrific city and its potential. Calgary remains an oasis of innovation and entrepreneurial spirit, with a balanced and healthy real estate market.

Just this morning I heard our dynamic and enlightened mayor, Naheed Nenshi, on the Eyeopener describing Calgary as the city of the future. I like our mayor, but I disagree. We are the city of the here and now, and the envy of the world. After seeing recent political developments, let’s get ready to welcome an influx of progressive, free-thinking people from Quebec to the city of opportunity.

RBC’s latest Housing Trends and Affordability Report said the local market has  enjoyed the best of all worlds recently: stronger home resales and home  building, moderately rising prices, and attractive and improving affordability. Calgary housing market among Canada’s most affordable

We’re not without some challenges, however, but our problems are small by comparison. Not enough inventory is the major concern. Students are having a hard time finding accommodation this semester. I guess it all depends which side of the fence you’re on. Landlords can pick and choose who they’ll rent to, and get a fair return on their investment. Tenants, on the other hand, will be paying more and will be getting screened more carefully.

Down to the nitty-gritty data, very little has changed since I last blogged two months ago. I fully expected we’d be seeing the usual autumn price drops by now, but the median price is still at spring-like levels. Inventory is still low, down 22% compared to last year. It’s difficult to have sales increases when there’s so little choice for buyers, but somehow, sales are still up over last year, and also up compared to the 3-year average.

First-time buyers

Two months ago, we were inundated with dire predictions of a market collapse when the end of 30-year amortizations was introduced. I expected first-time buyers would be hit hardest by the new rules, but the impact has been minimal. The table below is typical of the homes which first-time buyers will purchase, and is identical to last year, except for a slightly higher price:

Date # Sales Price per sq ft
2012 188 $250
2011 188 $239
Criteria: 2-storey homes in the suburbs under 1700 sq ft for the 30-day period Aug 8 – Sep 6, 2012

The biggest obstacle for first-timers is the lack of inventory. It’s hard to buy a house when there’s nothing to choose from. For the market to remain viable, we need buyers at the entry level so that move-up buyers can sell. This lack of listings really shows up in the “under $500,000″ price range, where there is only a 66-day supply of homes for sale.

What happens when there’s a lack of inventory?

When there’s a lack of inventory, an attractive and accurately-priced home will sell quickly. The above house was listed in the morning and had a conditional sale by sundown.

I hope you’ve enjoyed the great weather this summer.  Between real estate transactions, I finally climbed Canada’s highest maintained hiking trail which is right on our back door in beautiful Kananaskis Country. Centennial Ridge – Mt Allan hike.

Check back often, as I’ll be updating the blog regularly, at least until ski season starts.

Rents will be going up

(aka “Be careful what you wish for”)

“We recently moved into a new rental. The search was brutal. We went to numerous open houses and met numerous landlords and they all had plenty of people to choose from and even though we’re desirable renters it’s largely a first come first serve situation and involves a lot of luck…wow it was shocking how many renters and how few properties are out there.”

Two stories were on the CBC’s Eyeopener this morning about the difficulty in finding rental accommodation in Calgary.

“…101 people viewed the one bedroom beltline apartment Gonzalez had his eye on. Fifty people filled out applications and, after two interviews and a stringent screening process, Gonzalez landed the suite — a gruelling process he’s never been through before.”

Darren Paddock, the co-owner of RentFaster.ca, advises renters to find ways to help them stand out from their competitors because properties are going fast. He says “These people are getting a number of applicants in two to three days time…It’s really hot, we’ve never seen it like this before.”

Paddock also says an influx of workers and tighter mortgage rules are to blame.

Once again, we see the law of unintended consequences rear its ugly head. With the new mortgage rules making it more difficult to buy a house, people turn to renting, with the result of higher rents and a shortage of accommodation.

What happens next? Investors start finding it more attractive to buy houses/apartments and rent them out. The increase in demand for investment property will in turn put upward pressure on prices.

The vacancy rate in Calgary is already at a very low 1.9% and is predicted to tighten even further to 1.5% by 2013.

Read more Calgary renters struggle to find vacancies

A Calgary Herald article back in February was warning of a coming rental crunch:

Research at the University of Calgary noted that from 2000 to 2008, an  average of less than two per cent of all new dwellings constructed in Calgary  were intended for rental accommodation.

It also pointed out that from 2001 to 2009, Calgary lost about 7,500  apartment units to condo conversions. The “lack of rental housing construction  meant that the condominium conversions contributed to a 19 per cent loss in the  absolute number of rental housing units between 2001 and 2009,” the report  said.

Read more: Falling vacancy rates raise fears of rental crunch