Vacancy Rates for Calgary Apartments Hit 25 Year High
A Calgary real estate company’s recently published report has discovered that approximately 40% of apartment rentals in Calgary are currently sitting empty. The company used data and its own operation to find that there are 8,102 rental properties that are listed for rent in the city, while 37% of those listed properties do not currently have any tenants living there.
Canada’s Mortgage and Housing Corporation stated that the current level of Calgary’s apartment vacancy rate is the highest for the last 25 years, and has been caused by a weakening labor market resulting from the recent downturn in the province’s oil industry.
In October of last year the vacancy rate skyrocketed to 7% up from 5.3% in October of the previous year. Not only has the province as a whole experienced serious job losses with the economic downturn, but migration and population growth have also slowed down considerably. These are key driver’s of housing demand, particularly in the rental market. The city has also seen an ongoing increase in the supply of residential and rental properties, as projects that began during the boom years have failed to wind down in response to the shrinking market.
Calgary has now gone from being one of the lowest vacancy rate cities in the country to among the top 5 for highest vacancy rates:
• Saskatoon 10.3%
• St. John’s 7.9%
• Edmonton 7.1%
• Calgary 7%
• Saguenay 7%
During better economic times the vacancy rate in Calgary sat at less than 3%. Now rental prices are plummeting as landlords are desperate to fill their vacant units. Whereas a two bedroom unit was renting for $1,332 in October of 2015, the same unit would go for $1,258 in October of 2016. On top of drastic rent reductions, landlords have also started offering a number of additional perks to draw in new tenants, such as lowered damage deposits, free renovations and signing bonuses or gifts.
The forecast for vacancy and rental rates look similar heading into the new year. While the economic climate in the province is looking a little rosier, the supply glut that resulted from the construction boom during the years of low vacancies has left an enormous amount of excess rental units. It is projected that vacancy and rental rates will only slowly recover through the next year, staying close to a similar range at which they entered it.