It's a sign of a recovering economy: the Calgary rental housing sector is gaining traction, says a federal agency.
Rent is going up slightly and vacancies are tightening, says Canada Mortgage and Housing Corp.
After seeing a decline of $30 in the average monthly rent for two-bedroom apartments last fall, Calgarians will likely see an increase of $31 per month by this fall, it says.
In its rental market survey of more than 35,000 apartments in October, CMHC found two-bedroom apartments were fetching $1,069 per month on average, down from $1,099 in 2009.
By this fall, the forecast is for an increase to $1,100 per month.
The results of the 2010 survey show that Calgary's two-bedroom rent of $1,069 per month is the third highest in Canada behind Vancouver at $1,195 per month and Toronto's $1,123 per month.
There will likely be fewer vacant apartments this fall, says senior market analyst Richard Cho of CMHC.
The citywide vacancy rate is forecast to settle at about 3.6 per cent -- about the same as 2010, but well below 2009's 5.3 per cent.
"Of the 35,512 privately owned apartments surveyed, we found the number of vacant units decreased from 1,935 in 2009 to 1,291 in 2010," says Cho, adding the figure will remain fairly constant this year.
David McIlveen, director of community developments for Boardwalk Rental Communities, expects 2011 to be "flat" in terms of vacancy and rental costs.
Boardwalk is the largest private landlord in the city, with an estimated 5,000 rental units in Calgary. Only the City of Calgary controls more rental units.
"Our vacancy rate will stay the same as 2010 at about three per cent and rent rates won't go up or down by much," says McIlveen, adding boardwalk's rent citywide averages $977 per month.
Among Calgary tenants is Kim Leriger, who considers herself a career renter.
"I have been renting for 15 years, 10 of those with Boardwalk," says the single mom.
Along with 10-year-old Nicolas, she has an apartment in northeast Calgary. "I like the lifestyle," she says.
Prior to finding rental accommodation in Calgary, Leriger rented in Airdrie and Banff.
Why not buy? "As an extremely busy single mom, I don't really have the time to do the things needed if I owned a home."
Gerry Baxter, executive director of the Calgary Residential Rental Association has his own unofficial vacancy numbers for 2010.
"Based on what I hear from our members, I would still peg the vacancy rate at around five per cent or so," he says.
"I expect to see some downward moderation in the vacancy rate for this year while rents will remain relatively stable. If there are rent increases, I expect them to be small."
The sector began to notice an easing in the marketplace about midway through 2010 that "seemed tied to the economic recovery" that was beginning to take hold, says Baxter.
But just as quickly, the recovery sputtered with the arrival of autumn.
"I believe that overall, the market improved slightly in the second half and has plateaued -- and I'm cautiously optimistic that this year will be better than 2010," says Baxter.
Boardwalk's McIlveen says that in 2010 vacancy rates and rent rates declined in response to economic conditions and supply and demand.
"In fact, our market rent -- what a tenant pays for a new one-year lease -- has come down a couple of hundred dollars per month," he says.
Although the decline in in-migration has had an impact, McIlveen says the biggest factor affecting Boardwalk has been the "one-off investor who can't sell their condo and puts it into the rental pool."
Cho says rental demand this year will be sustained as the economy gradually improves.
"Improvements in labour market conditions and recent gains in provincial net migration have contributed to higher rental demand," he says. "In addition, with rental rates moderating from the previous year and real estate prices in Calgary easing since the spring, the motivation for tenants to move into homeowner-ship has moderated."
CMHC reports the average two-bedroom rent declined for the second consecutive year as vacancy rates, although moving lower, remained elevated by historical standards.
"However, the decline has been enough to remove some incentives from the market that tenants enjoyed prior to the October survey.
Since the 2009 fall survey, landlords and property owners have adjusted monthly rents and offered various incentives to attract tenants," says Cho.
In addition to the vacancy rate, CMHC also has what it calls an "availability rate." A rental unit is considered available if the existing tenant has given notice of a move and a new tenant has not signed a lease, or the unit is vacant.
The availability this past October was pegged at 5.8 per cent compared with 7.5 per cent in 2009.
McIlveen uses the term turnover rate which he says gives a better picture of what is happening in the marketplace.
"Most tenants are a little more transient and we have turnover rate of 40 to 50 per cent per year. That would suggest that there are as many as 1,500 units available for rent over the course of the year that are never considered vacant," he says.
DID YOU KNOW?
As was the case among rental apartment units, demand for townhouse units also improved in 2010, says Canada Mortgage and Housing Corp. In its October rental market survey, CMHC found the overall vacancy rate for townhouse units decreased from 4.7 per cent in October 2009 to 3.7 in 2010. The North Hill area had the lowest overall vacancy rate at 2.4 per cent and the southeast had the highest at 5.7 per cent. Of the 10 zones surveyed, there were two zones that did not report a year-over-year decline in the vacancy rate. Vacancies in the southeast remained unchanged at 5.7 per cent, while the vacancy rate in the northeast increased 0.3 per cent to 4.6. Zones that experienced the largest change in vacancies were North Hill and
southwest, declining by 7.4 and 4.4 percentage points from the previous year, respectively.
