Forget about lucky stars.
Melissa Andrews has low interest rates and a deflated stock market to thank for an apartment rental deal that should boost her savings account by at least $75 a month beginning this July.
A French teacher whose job quest has taken her from Medicine Hat to Edmonton to Calgary over the past three years, Andrews is thrilled to know she’ll be at the same Calgary school this fall.
Better yet, a rental suite incentive means she goes back to work having trimmed $75 a month off the terms of a two-bedroom apartment she and a teacher friend are sharing beginning July 1.
They swung the discount “just by signing a one-year lease,” says Andrews, 24.
Andrews’ good fortune is the result of a competitive rental market that pegs Calgary’s vacancy rate at about five per cent, up from 4.4 per cent in 2003.
Although it’s higher than vacancy rates in Vancouver and Edmonton, all three cities are posting slight vacancy rate increases over 2003 as low interest rates continue to attract renters into the housing market, says Marnie Plunkett, an analyst with Canada Mortgage and Housing Corp. (CMHC) in Calgary.
The low stock market returns of recent years contributes to the vacancy rate by encouraging investors to put their money into the rental market versus stocks.
Vacancy increases aside, the rental market in all three cities is competitive – and robust.
CMHC estimates Vancouver’s vacancy rate at 2.2 per cent for 2004, a scant increase from two per cent in 2003.
Average rents in that city will rise by 1.5 per cent over the course of the year.
That’s lower than the rate of inflation “and an indication that building owners are hesitant to risk further vacancies through rent hikes,” says CMHC’s latest Vancouver Rental Market Report.
The picture regarding rent increases is similar in Edmonton and Calgary.
“When we entered the new year we were expecting to see vacancies of around four per cent, up from 3.4 per cent last October,” says Richard Goatcher, senior market analyst, CMHC.
But with multi-family construction levels stronger than expected, he anticipates vacancy rates could be “closer to five per cent when we do the survey this fall.”
Rents in Edmonton will rise 2.5 per cent over 2003 rates, with Calgary expected to post increases of about two per cent.
Vancouver’s low vacancy rate shows that market’s continued strength, says Cameron Muir, senior market analyst with CMHC’s Vancouver office.
Whereas investors may be stepping back from the rental market in Alberta’s two largest cities, Vancouver investors anticipate an increase in property prices.
“That capital appreciation is really what they’re banking on and that really signals confidence that they have in the market over the next several years,” says Muir.
In Edmonton and Calgary, industry arguably “overreacted” to the tighter rental markets of 2000 and 2001 and is still putting new rental units into a market that’s no longer in short supply, says Goatcher.
But the news isn’t all bad. Goatcher says business is brisk and even though rents may have plateaued, that’s not likely to hold if rising mortgage rates rekindle rental market interest in the coming months.
Increased competition for renters in Edmonton and Calgary shouldn’t have caught anyone off guard, adds David McIlveen, director of community development for Boardwalk Rental Communities.
Headquartered in Calgary, Boardwalk is the nation’s largest residential real-estate landlord, owning and managing some 31,000 units, including more than 10,000 units in Edmonton and 4,200 units in Calgary.
When Boardwalk saw where the market was going, the firm pumped $300 million into renovating its Western Canadian holdings.
The company also sent the word out to rank-and-file personnel, who advertised sales on certain units and stepped up efforts to retain and attract tenants.
To keep Boardwalk’s vacancy rates under CMHC averages, “we never miss a call,” says McIlveen.
That investment in product and service costs in the short term. Then again, Boardwalk isn’t in business for the short term.
Tough news for those who make their business in the rental market still translates into good new for renters such as Andrews.
Factor in a roommate to cost-share everything from rent to phone, cable and Internet service and Andrews, 24, figures this latest move could put an extra $300 into her bank account every month.
That could take her right out of the rental market by putting her closer to a down payment on a condominium or house.
How do you say, “delightful irony” in French? Andrews doesn’t care. She’s got that job, a new apartment and a couple of months to savour it all before the school bell rings on another term.
(Joy Gregory can be reached at firstname.lastname@example.org)