In a bittersweet twist of fortune for Kelowna, the city has become one of the easiest places to find rental accommodation in the country.
Canada Mortgage and Housing Corporation’s spring survey revealed that in April 2011 Kelowna’s rental vacancy rate was 6.6 per cent, ranking it alongside other rental-laden cities like Windsor, Ontario, which had a 9.4 per cent rental rate, Abbotsford with a 6.6 per cent rate and Charlottetown, PEI, which had a 4.9 per cent rental rate. On a provincial basis, the highest vacancy rate was in Alberta with 4.7 per cent.
While it’s good news for those who aren’t in a buyer’s frame of mind, bolstered rental rates tie in directly to Kelowna’s weakened real estate market. In recent years an over supply of condos and secondary homes prompted many owners to turn their property into rentals.
“There’s a lot of investor owned condos out there, available for rent,” said Kelowna CMHC market analyst, Paul Fabri.
“In the mid 2000s, we saw a lot of condominium development and much of that supply was bought by purchasers who wanted secondary homes. Since then a lot of that has come on-stream as rental.”
Since 2007, when the rental rate was zero, there have been some other developments as well.
Some developers entered into building rental properties, and a couple are still in the works. A lot more new, detached homes were built with secondary suites and the university started building up their on-campus supply to meet the needs of a growing student body.
And, while the supply side grew, Fabri noted there was another development as well.
“Demand has moderated. There was some outflow of renters in to home ownerships in the last two years, but another reason why it’s moderated is that employment growth has slowed in the Kelowna area, so that translated to less demand,” he said.
Nationwide the average rental apartment vacancy rate in Canada’s 35 major centres has actually gone the other way.
It decreased to 2.5 per cent in April 2011, from 2.9 per cent in April 2010, according to the spring Rental Market Survey.
“Immigration continues to be a factor in supporting rental housing demand. Recent immigrants tend to rent first before becoming homeowners,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre.
“In addition, condominium completions moved lower in the past months, while rental apartment unit completions remained relatively stable.
As a result, the overall demand for rental apartment units increased faster than supply for this type of housing. Accordingly, this pushed Canada’s vacancy rate downward. “
The results of CMHC’s spring survey reveal that, in April 2011, the major centres with the lowest vacancy rates were: Winnipeg and Regina with 0.7 per cent. At the provincial level, Manitoba has the lowest vacancy rate at 0.7 per cent. All other provinces were above 2.0 per cent.
Rents haven’t changed significantly in the last year. A Canadian average two-bedroom rent was $864 in April 2011, compared to $848 in April 2010. Provincially, the highest average monthly rents were in Alberta, which were $1,029, and British Columbia which was $1,015 and Ontario at $980.
The lowest average monthly rents for two-bedroom apartments in new and existing structures were: Saguenay $542; Trois-Rivières $546; and Sherbrooke $577. On a provincial basis, the lowest monthly rents were: Québec $671; New Brunswick $672; and Newfoundland and Labrador $683.