Rental Vacancies Influence the Market:
Calgary’s Vacancy Rate of 1.6% is among the lowest in Canada

In the first half of 2006, Canada is enjoying a solid economy and a strong job creation climate – in fact, national unemployment was recently reported as the lowest level since the 80s. That’s good news for Canadians in general, and it bodes well for the real estate market. Such positive economic conditions promote the formation of new households – young people are earning enough money to leave the nests and set out on their own; and new immigrants are quickly finding employment and establishing themselves in their own homes. All this adds up to demand for both home ownership and rental housing.

According to the Canada Mortgage and Housing Corporation (CHMC), the national rental vacancy rate is now stabilizing at 2.7%, the same rate as the previous year – a recording-breaking year for home sales. According to the CMHC’s annual Rental Market Survey, the average rental apartment vacancy rate in Canada's 28 major centres was unchanged at 2.7% in October 2005 compared to the previous year. This vacancy rate remains below the average of 2.8% observed over the 1995 to 2004 period.

According to CMHC, the stabilizing of the vacancy rate reflects a number of factors. These upward and downward pressures are tending to balance each other out. As the majority of new immigrants initially settle in rental housing, high levels of immigration have been a key driver of rental demand. Also, more renters remained in rental units as the gap between the cost of home ownership and renting increased in 2005. These two factors have put downward pressure on vacancy rates over the past year. Meanwhile, strong home ownership demand continues to apply upward pressure on vacancy rates. 

According to the CMHC report, centres with the highest vacancy rates in 2005 included Windsor (10.3%), Saint John, NB (5.7%), Saskatoon and Thunder Bay (both at 4.6%), Edmonton and St. John’s, NFLD (4.5%). Centres with the lowest vacancy rates included Victoria (0.5%), Vancouver (1.4%), Calgary and Greater Sudbury (both at 1.6%).

CMHC reports that the average rents for two-bedroom apartments increased in 25 of the 28 major centres, however, the majority of rent increases were small. The greatest increases occurred in Kitchener and Victoria where rents were up 6.0% and 4.8%, respectively. Overall, the average rent for two-bedroom apartments across Canada's 28 major centres increased by 1.6% in October 2005 compared to the previous year. The highest average monthly rents for two-bedroom apartments were in Toronto ($1,052), Vancouver ($1,004), and Ottawa ($920). 

For more insight on the rental vacancy in Calgary and how it may affect your investment properties, please contact me.

Frank N. McCullough, M.Eng. REALTOR
MaxWell City Central
Phone: (403) 288-2422
Email: frankmc@creb.com