Moishe Alexander’s Review

Highlights

Moishe Alexander says the rental apartment vacancy rate went up again in the Sherbrooke census metropolitan area (CMA). After climbing by 1.2 percentage points in 2007 to 2.4 per cent, the vacancy rate continued to increase in 2008, reaching 2.8 per cent. The rental market has been easing for five years. The estimated change in the average apartment rent was 2.1 per cent between the October 2007 and October 2008 surveys in the Sherbrooke CMA.

Higher vacancy rate in 2008

Moishe Alexander says According to the results of the latest CMHC Rental Market Survey conducted in 2008, the rental apartment vacancy rate1 went up again in the Sherbrooke census metropolitan area (CMA). After climbing by 1.2 percentage points in 2007 to 2.4 per cent, the vacancy rate continued to increase in 2008, reaching 2.8 per cent. As shown in Figure 2, the rental market has in fact been easing for five years.

In the other CMAs across the province, the vacancy rate increased only in the Trois-Rivières area (from 1.5 per cent in 2007 to 1.7 per cent in 2008). The vacancy rates fell in the Montréal CMA, the Gatineau area and the Saguenay CMA, to 2.4 per cent, 1.9 per cent and 1.6 per cent, respectively, for decreases of 0.5, 1.0 and 1.2 percentage points. It was in the Québec area, however, that the market was the tightest, with fewer than 1 per cent of the apartments vacant there.

Supply remains stable but demand moderates

Moishe Alexander says The vacancy rate increase in the Sherbrooke CMA in 2008 resulted from a moderating demand and stable supply. The number of units in the rental housing stock dropped by 6 per cent in the CMA (from 32,891 units in 2007 to 30,842 units in 2008), but this decrease was mainly caused by the withdrawal of retirement home apartments from our 2008 survey universe. Given this change, supply effectively remained fairly stable between 2007 and 2008 (-1 per cent). At first glance, the stability of the rental housing universe may seem surprising. In fact, between our October 2007 and October 2008 surveys, just over 300 traditional rental apartments were completed, which should normally have increased supply on the market. However, as mentioned earlier, the rental housing stock decreased by 300 units.

This does not necessarily mean that there were fewer rental units on the market this year than last year. It is possible that a number of buildings had to be temporarily withdrawn from the survey universe, as they contained fewer than three rental units. This can occur when one of the apartments in a three-unit building is occupied by the owner.  On the demand side, migrants who come to an area, whether from other areas of Quebec or elsewhere, are definitely one of the main factors. In fact, most newcomers to an area choose to rent when they arrive.

Preliminary data2 show that fewer immigrants planned to settle in the Estrie area in 2008. At the end of the first half of 2008, the data showed a decrease of 7 per cent compared to the same period in 2007 (about 40 fewer people). Should the data turn out to be accurate, the decline in immigration in 2008 could therefore be partly responsible for the increase in the vacancy rate this year.  In addition, still attracted by the abundance of job opportunities out West, people from Sherbrooke may have continued to move there, lowering net migration in the CMA and weakening potential demand for rental units.
Another factor that may have contributed to the rise in the vacancy rate is the fact that the labour market has been less favourable to young people since the end of 2007, which may have caused some of them to delay leaving the family home, further moderating demand for rental apartments.

Impact of homeownership

Moishe Alexander says As we have already mentioned, the proportion of vacant rental units has been increasing for a few years now in the Sherbrooke CMA. In recent years, sales of existing and new homes have remained strong, suggesting that many renter households made the transition to homeownership, which therefore pushed up the vacancy rate.

In fact, young households now account for a slightly smaller share of rental market clients, as indicated by the 2001 and 2006 census data. It is likely that a greater number of young households are now moving straight to homeownership and bypassing the rental market, also contributing to driving up the vacancy rate. While there are no data to confirm or refute this hypothesis, many younger people may have been attracted to buying homes, such as condominiums, which are more affordable. In fact, sales of new and existing condominiums increased significantly in 2007 and 2008 in the Sherbrooke CMA. It should also be mentioned that financing conditions are still favourable to home buying, such that young households can consider becoming homeowners.

Market easing for larger units

Moishe Alexander says As was the case last year, bachelor units posted the least tight conditions on the rental market, with a vacancy rate of 4.9 per cent in 2008. As well, the market eased for apartments with three or more bedrooms, with the vacancy rate increasing by 1.4 percentage points between the last two October surveys (1.4 per cent in 2007, versus 2.8 per cent in 2008). The decrease in the number of immigrant families, often larger than families who are native to the area3, may have contributed to the increase in the percentage of unoccupied units in this category. The vacancy rate for two-bedroom apartments also rose, but to a lesser extent.

Vacancy rates up in almost all sectors of the CMA

Moishe Alexander says The vacancy rates in the west and central districts of the city of Sherbrooke increased in 2008. Having now surpassed 3 per cent in both districts. Among all the zones in the CMA, the west district posted the largest year-over-year vacancy rate increase (+1.7 percentage points). Students from the Université de Sherbrooke usually fuelled demand for rental units in that sector. While this policy had no impact last year, free public transit for students may have encouraged some to look further away from campus for an apartment that would better meet their needs. While the vacancy rate rose for all unit types combined, rental market conditions in the west district particularly eased for bachelor apartments, which are usually popular with students. In fact, the proportion of vacant units in this category jumped from 1.8 per cent to 7.9 per cent. In the former city of Sherbrooke, the east district recorded the smallest percentage of unoccupied units (1.9 per cent). In fact, it was in this district that the withdrawal of retirement home apartments from our survey universe this year had the greatest impact. In effect, by including retirement homes, the 2007 vacancy rate was much higher there. It should be recalled that our latest retirement home market survey report showed that many rental units were vacant in the east district.

The vacancy rates also increased

Moishe Alexander says year-over-year in the former suburbs of Rock Forest (from 1.2    per cent to 1.4 percent), Fleurimont (from 1.4 per cent to 2.1    per cent) and Ascot–Lennoxville (from 3.8 per cent to 5.1 per cent).  However, rental units in these sectors account for less than 25 per cent of the total rental housing stock in the CMA. Contrary to the other sectors of the CMA, the Magog area saw its vacancy rate drop to 2.9 per cent in 2008 (from 3.3 per cent in 2007). With the regional manufacturing sector experiencing difficulties, some renter families likely decided to postpone the purchase of a home. In fact, market conditions got tighter for units with three or more bedrooms, as their vacancy rate fell by 1.9 percentage points (from 4.8 per cent in 2007 to 2.9 per cent in 2008). With sales of existing singlefamily houses having fallen significantly in the area in 2008, larger apartments may have become the best compromise for renter families in the current economic environment. It is also possible that workers seeking better job prospects left the area, further moderating the rental housing demand.

Rents in 2008

Moishe Alexander says The estimated change in the average apartment rent was 2.1 per cent between the October 2007 and October 2008 surveys in the Sherbrooke CMA. Apart from onebedroom units, for which the average rent rose by 4.2 per cent, the other unit types recorded increases of around 2 per cent.  The average rent for two-bedroom apartments reached $543 while, for apartments with three or more bedrooms, the average attained $658. The average rents for bachelor apartments and one-bedroom units, for their part, rose to $368 and $437, respectively.

Older buildings bear the brunt of the easing rental market

Moishe Alexander says In the CMA, there were greater proportions of vacant units in rental structures built before 1990 (see Table 1.2.1). Buildings completed from 1960 to 1974 posted the highest vacancy rate (3.6 per cent).  Conversely, very few apartments were vacant in structures built from 1990 to 1999, which had a vacancy rate slightly above zero (0.4 per cent).

The trend observed in the last few years for smaller structures (with three to five units) continued, as they still posted the lowest vacancy rate (1.7 per cent). This result contrasted with that of residential buildings with 20 to 99 units, for which the vacancy rate was slightly below 4 per cent.

Rental affordability falls slightly

Moishe Alexander says CMHC’s rental affordability indicator4 is a gauge of how affordable a rental market is for those households which rent within that market. In 2008, the affordability indicator4 was 128, compared to 133 in 2007. While rental affordability has decreased, Sherbrooke area households continued to spend less than 30 per cent of their gross income on rent, as they have for the last ten years. In 1998, the indicator had dropped below 100, reaching 93.

In addition, a review of the data for two-bedroom apartments, which do account for over half of the rental housing stock in the CMA, reveals that affordable units remained the (from 3.3 per cent in 2007). With the regional manufacturing sector experiencing difficulties, some renter families likely decided to postpone the purchase of a home. In fact, market conditions got tighter for units with three or more bedrooms, as their vacancy rate fell by 1.9 percentage points (from 4.8 per cent in 2007 to 2.9 per cent in 2008). With sales of existing singlefamily houses having fallen significantly in the area in 2008, larger apartments may have become the best compromise for renter families in the current economic environment. It is also possible that workers seeking better job prospects left the area, further moderating the rental housing demand.

Rents in 2008

Moishe Alexander says The estimated change in the average apartment rent was 2.1 per cent between the October 2007 and October 2008 surveys in the Sherbrooke CMA. Apart from one bedroom units, for which the average rent rose by 4.2 per cent, the other unit types recorded increases of around 2 per cent.  The average rent for two-bedroom apartments reached $543 while, for apartments with three or more bedrooms, the average attained $658.  The average rents for bachelor apartments and one-bedroom units, for their part, rose to $368 and $437, respectively.

You can find the entire report in PDF format through the following link:

http://www.cmhc-schl.gc.ca/odpub/esub/64447/64447_2008_A01.pdf

Moishe Alexander’s Review

Highlights

Moishe Alexander says the average vacancy rate in Regina’s rental apartments was 0.5 per cent in October 2008, down from the 1.7 per cent in October 2007. Regina tied with Vancouver and Victoria for the second lowest vacancy rate in Canada. Average rent for all types of suites increased $87 monthly between surveys. One-bedroom suites increased $80 monthly and two-bedroom suites went up $95 monthly. Three-bedroom plus apartments increased $116 monthly. The average vacancy rate for Regina will increase to 1.2 per cent in 2009 as in-migration slows because of a slower increase in employment and rising rents.

NATIONAL VACANCY RATE DECREASED IN OCTOBER 2008

Moishe Alexander says The average rental apartment vacancy rate in Canada’s 34 major centres decreased to 2.2 per cent in October 2008 from 2.6 per cent in October 2007. The centres with the highest vacancy rates in 2008 were Windsor (14.6 per cent), St.  Catharines-Niagara (4.3 per cent), and Oshawa (4.2 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Kelowna (0.3 per cent), Victoria (0.5 per cent), Vancouver (0.5 per cent), and Regina (0.5 per cent). Demand for rental housing in Canada increased due to high migration levels, youth employment growth, and the large gap between the cost of homeownership and renting. Rental construction and competition from the condominium market were not enough to offset growing rental demand. The highest average monthly rents for two-bedroom apartments in new and existing structures were in Calgary ($1,148), Vancouver ($1,123), Toronto ($1,095), and Edmonton ($1,034), followed by Ottawa ($995), Kelowna ($967), and Victoria ($965). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Trois-Rivières ($505), Saguenay ($518), and Sherbrooke ($543). Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Saskatoon (20.3 per cent), Regina (13.5 per cent), Edmonton (9.2 per cent), and Kelowna (8.4 per cent).  Overall, the average rent for twobedroom apartments in existing structures across Canada’s 34 major centres increased by 2.9 per cent between October 2007 and October 2008.
CMHC’s October 2008 Rental

Moishe Alexander says Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto, Vancouver, and Victoria. In 2008, vacancy rates for rental condominium apartments were below one per cent in four of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Regina, Toronto, Ottawa, and Vancouver. However, Calgary and Edmonton registered the highest vacancy rates for condominium apartments at 4.0 per cent and 3.4 per cent in 2008, respectively.  The survey showed that vacancy rates for rental condominium apartments in 2008 were lower than vacancy rates in the conventional rental market in Ottawa, Regina, Saskatoon, and Toronto. The highest average monthly rents for two bedroom condominium apartments were in Toronto ($1,625), Vancouver ($1,507), and Calgary ($1,293). All surveyed centres posted average monthly rents for two-bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2008.

REGINA RENTAL MARKET SURVEY

Regina average vacancy 0.5 percentage points

Moishe Alexander says Canada Mortgage and Housing Corporation (CMHC) conducted a rental market survey in October 2008 and found the average vacancy rate in Regina’s rental apartments was 0.5 per cent, down 1.2 percentage points from 1.7 per cent in the October 2007 survey. In comparison to other Census Metropolitan Areas, Regina tied with Vancouver and Victoria for the second lowest vacancy rate in Canada. The survey found that no more than 16 vacant suites existed in any rental survey zone. As a whole, the city and surrounding areas had 52 vacant suites in the survey universe at the time the rental market survey took place.

The decline in the average vacancy rate is attributable to increased inmigration stemming from positive job growth. The rising gap between the cost of home ownership and renting through 2007 and the early part of 2008 also kept demand strong for rental accommodation. Most survey zones recorded a decline in the vacancy rate with only the East and Northeast zones experiencing a slight increase in the rate. All survey zones recorded an average vacancy rate less than one per cent. The Central zone recorded a decline of 2.8 percentage points in the average vacancy rate, the largest decline seen in the city comparing the October 2007 results to the 2008 survey. The East and West zones tied for the highest vacancy rate of 0.8 per cent, though this represents less than 10 vacant suites in each of these zones.  The average vacancy rate is up slightly in the East zone and down 1.5 percentage points in the West. Regina South (Wascana and University) recorded an average rate of 0.1 per cent, the lowest average vacancy rate in the city. The survey found one vacant suite in a survey universe of over 1,000 suites. As the name suggests, projects in this zone benefit from the demand created by students attending the university and Saskatchewan Institute of Applied Science and Technology (SIAST). Employees of these two institutions also contribute to rental demand.

Among suite types, the October 2008 survey found that vacancy rates ranged from 0.3 per cent in one-bedroom suites and 1.2 per cent in bachelor and three-bedroom suites. The average vacancy rate is traditionally higher in bachelor suites, as they are less in demand due to their smaller size. One reason for the higher average vacancy for threebedroom suites may be that rent has increased to the point that some rental households have moved to ownership. Notwithstanding the increase in the average vacancy rate, vacant suites are still scarce for these three bedroom suite types.  The survey report features information on the availability of suites within a rental market. A rental unit is available if the unit is vacant, or the existing tenant has given or received official notice to move and a new tenant has not signed a lease. As the definition of availability includes vacant units, the availability rate will always be equal to or greater than the vacancy rate.  Results of the survey indicate that the availability rate was 1.2 per cent, 1.3 percentage points lower than the average availability rate reported in October 2007.

Average rents increase $87 monthly

Moishe Alexander says Average rent for all types of suites increased $87 monthly between survey periods. One-bedroom suites increased $80 resulting in average rent of $634 monthly. Two-bedroom suites escalated $95 to arrive at a monthly average rent of $756.  Three-bedroom plus apartments increased $116 monthly resulting in average monthly rent of $908. The higher than average increase in rent for three-bedroom plus suite types may have contributed to the increase in vacancy. Turning to individual zone results for all types of suites, the largest increase in nominal rent of $137 monthly occurred in East survey zone projects. This zone contains the smallest number of suites in the survey universe. Moreover, it features the largest number of three-bedroom suites, a rare housing form considered desirable by renters due to the size of these suites. These two factors have led to an increase in average rent and resulted in this zone recording the highest average rent for all types of suites.
Regina’s Northwest zone saw the highest average rent for onebedroom apartments at $749 monthly. Projects tend to be newer in this zone and command higher rents. Central Regina recorded the lowest average rent at $587.

Buildings in this zone tend to be older and the suites smaller than in other zones. Census data confirms that household income is the lowest in the city. These suites would appeal to one-person renter households suggesting that household income would be even lower than the average. This limits the potential for higher rental rates.

CMHC’s measure of estimating the growth in rents for a fixed sample of structures is based on structures common to the survey sample for both the 2007 and 2008 surveys.  The measure aims at better understanding rent changes in existing structures by excluding from the calculation the rents of newly built apartment buildings. The methodology section at the end of this report provides detailed information on this measure. For the Regina CMA, the year-over-year gain in average rent from the fixed sample is 13.8 per cent for all types of apartments in all zones. Both onebedroom suites and two-bedroom apartments experienced a 13.5 per cent gain.

Private rental market supply declines

Moishe Alexander says The attraction of homeownership relative to renting in recent years as well as other important factors has had the effect of reducing the size of Regina rental market. According to Census data, rental units declined as a proportion of total dwellings between 2001 and 2006. While the number of private dwellings increased by 4.7 per cent, the number of rental dwellings declined by 1.4 per cent. CMHC’s annual Rental Market Survey shows that the Regina privately initiated rental universe declined by 220 units between 2007 and 2008 because of rental unit conversion to condominiums, closure for renovations or demolition. Furthermore, there have been no additions to the private rental stock in the form of housing starts over the last year.

Rental Affordability Indicator

Moishe Alexander says According to CMHC’s rental affordability indicator, affordability in Regina’s rental market declined this year. The cost of renting a median priced two-bedroom apartment climbed 17 per cent in 2008, while the median income of renter households grew at 5.4 per cent.  The rental affordability indicator in Regina stands at 93 for 2008, the lowest level of affordability on record.

RENTAL MARKET OUTLOOK

Average vacancy rate to rise in 2009

Moishe Alexander says The average vacancy rate for Regina will increase to 1.2 per cent in 2009 as in-migration slows because of a slower increase in employment and rising rents. Renters are doubling up in order to compensate for rising rents thus contributing to the increase in vacancy. In addition, newer, investor-owned condominiums are drawing off demand from existing rental projects Furthermore, Regina’s resale market is experiencing an increase in supply and price increases have slowed. This situation should persist until late 2009 and will lead to more rental households moving to homeownership as the difference in cost between owning and renting slows its rate of increase. Average rents for two bedroom suites in the city will increase to $855 monthly in 2009 due to low vacancies. In addition, rents will increase to compensate for operating and maintenance cost increases experienced in previous years.

CONDOMINIUM AND OTHER SECONDARY RENTAL UNITS – SURVEY RESULTS

Moishe Alexander says Regina’s version of CMHC’s October Rental Market Survey, which covers private row and apartment structures with three or more units, now includes information on rental condominium apartments as well as other types of rental units in the secondary rental market. The additional information should help to provide a more complete overview of all rental markets in the Regina CMA. The methodology section at the end of this report provides more information on this Secondary Rental Market Survey.

Vacancy rate of rental condominium apartments similar to purpose built rental

Moishe Alexander says Table 4.3.1 provides information on the size of the condominium rental apartment market in Regina. Of the 2,590 condominium units sampled, 303 or 11.7 per cent were rental.  The average vacancy rate of 0.3 per cent in Regina’s rental condominium apartments was similar to the vacancy rate of 0.5 per cent for purpose – built rental. At this time, the size of the rental condominium apartment universe does not allow CMHC to determine the average rental rates for such units. The survey found 8,622 households in other secondary rental units of various forms including single and semi-detached, row and other accessory suites. Average rent for all of these types was $764. Average rent for row and semi-detached units was $768. Average rent for single-detached units was $779.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64431/64431_2008_A01.pdf

Moishe Alexander’s Review

Highlights

Saskatoon, Sask. - Credit Marbla123, Flickr Creative Commons

Moishe Alexander says the average vacancy rate in Saskatoon’s private apartment buildings with three or more units increased by 1.3 percentage points to 1.9 per cent in October 2008, up from 0.6 per cent in the 2007 survey. The average monthly rental rate for all types of suites surveyed in October 2008 saw a $129 increase from the October 2007 figure, reaching $761 monthly. Our forecast is for an increase in the average vacancy rate in 2009 to two per cent in October 2009. Expect an increase of $19 in 2009 bringing the average rent for a two-bedroom suite to $860.

NATIONAL VACANCY RATE DECREASED IN OCTOBER 2008

Moishe Alexander says the average rental apartment vacancy rate in Canada’s 34 major centres decreased to 2.2 per cent in October 2008 from 2.6 per cent in October 2007. The centres with the highest vacancy rates in 2008 were Windsor (14.6 per cent), St.  Catharines-Niagara (4.3 per cent), and Oshawa (4.2 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Kelowna (0.3 per cent), Victoria (0.5 per cent), Vancouver (0.5 per cent), and Regina (0.5 per cent). Demand for rental housing in Canada increased due to high migration levels, youth employment growth, and the large gap between the cost of homeownership and renting. Rental construction and competition from the condominium market were not enough to offset growing rental demand.

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Calgary ($1,148), Vancouver ($1,123), Toronto ($1,095), and Edmonton ($1,034), followed by Ottawa ($995), Kelowna ($967), and Victoria ($965). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Trois-Rivières ($505), Saguenay ($518), and Sherbrooke ($543).
Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for twobedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Saskatoon (20.3 per cent), Regina (13.5 per cent), Edmonton (9.2 per cent), and Kelowna (8.4 per cent).  Overall, the average rent for twobedroom apartments in existing structures across Canada’s 34 major centres increased by 2.9 per cent between October 2007 and October 2008.
CMHC’s October 2008 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto, Vancouver, and Victoria. In 2008, vacancy rates for rental condominium apartments were below one per cent in four of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Regina, Toronto, Ottawa, and Vancouver. However, Calgary and Edmonton registered the highest vacancy rates for condominium apartments at 4.0 per cent and 3.4 per cent in 2008, respectively.  The survey showed that vacancy rates for rental condominium apartments in 2008 were lower than vacancy rates in the conventional rental market in Ottawa, Regina, Saskatoon, and Toronto. The highest average monthly rents for two bedroom condominium apartments were in Toronto ($1,625), Vancouver ($1,507), and Calgary ($1,293). All surveyed centres posted average monthly rents for two-bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2008.

SASKATOON RENTAL MARKET SURVEY

Average vacancy rate in Saskatoon edges higher

Moishe Alexander says Canada Mortgage and Housing Corporation’s rental market survey found the average vacancy rate in Saskatoon’s private apartment buildings with three or more units increased by 1.3 percentage points to 1.9 per cent in October 2008, up from 0.6 per cent in the 2007 survey.

The increase in the average vacancy rate is attributable to the movement of first-time homebuyers to the new and resale ownership market.  Increased selection in the resale and new construction markets has facilitated this move to home ownership. Prospective first-time buyers in 2007 had faced a lack of selection in the resale market due to sellers’ or accelerating market conditions. Through much of 2007 there was less than three months of supply of listings in the resale market.

The number of active listings has increased throughout 2008. Newly constructed townhouses and other units purchased by investors for rental purposes have also provided additional competition for landlords.

This has provided renters with alternatives to the primary rental stock, further contributing to the rise in average vacancy in private apartments.
Lowest vacancy rate found in Lakeview

Moishe Alexander says the average vacancy rate for all types of suites was as high as 4.7 per cent in the Southwest survey zone and as low as 0.9 per cent in the Lakeview survey zone.

Average vacancy was one per cent or less in the Nutana and Lakeview survey zones reflecting, primarily, the desirable locations of these areas.  The neighborhoods in these areas are close to the University of Saskatchewan and have easy access to major employers.

The largest increase in the average vacancy rate occurred in the Southwest and North survey zones.  Historically, the Southwest zone has been the first to experience any general decline in rental demand.

According to Census data, neighborhoods within this zone have some of the oldest rental stock in the city and, though rents are lower than other survey zones,
renters are willing to pay a premium to move to other areas. Further, industry sources have advised that lower income individuals in this area are doubling-up in the face of rising rents.

The North is a desirable area for households finding employment in the many businesses in that sector of the city, yet the average vacancy rate increased by 2.8 percentage points since the 2007 survey.

Industry contacts inform us that many renter households have moved into homeownership or moved to investor-owned rental accommodation.

Looking at average vacancy rate by suite type, the survey found that all suite types, except bachelor suites, experienced similar average vacancy rates ranging from 1.7 per cent in three-bedroom and larger suites to 1.8 per cent for one and twobedroom suites. Bachelor suites saw an average vacancy rate of 2.3 per cent, 0.5 per percentage points higher than one and two-bedroom suites. The average vacancy rate is traditionally higher in bachelor suites.  Bachelor suites are less in demand due to their smaller size. Threebedroom suites are more popular, on average, because they are larger and make it easier to double-up comfortably, thus reducing the rent paid by each household.

Availability rate increases 1.4 percentage points

Moishe Alexander says the survey studied the availability of suites in the Saskatoon CMA in October. A rental unit is available if the unit is vacant, or the existing tenant has given or received official notice to move and a new tenant has not signed a lease. Saskatoon rental apartments surveyed saw an increase in availability in this most recent survey. The availability rate in October 2008 was 3.2 per cent, up 1.4 percentage points from the 2007 survey.

Average rents increase $129 monthly

Moishe Alexander says the average monthly rental rate for all types of suites surveyed in October 2008 saw a $129 increase from the October 2007 figure, reaching $761 monthly. These increases have occurred because of the historically low average vacancy in 2007. Record net in-migration was a key factor behind the low vacancy rate in 2007. The rising gap between the cost of home ownership and renting through 2007 and the early part of 2008 also kept demand strong for rental accommodation. Bachelor suites experienced an increase of $83 in the average monthly rent. One-bedroom suites in all zones saw their average monthly rent increase by $111 bringing them to $675 monthly.  Two-bedroom average rent grew by $148 to arrive at $841 per month.  The average rent for three-bedroom and larger suites in all zones jumped $128 to $860 monthly.

The largest increase of $158 monthly for all types of suites took place in the Lakeview survey zone.

The West and North zones experienced an increase of about $150 monthly. The Southwest survey zone saw the lowest rental increase of $100 monthly.
The survey zones with the highest monthly average rent for all types of suites were Lakeview and Northeast Saskatoon with average rents of $831 and $824 respectively. Rental housing in these neighborhoods are in high demand due to their close proximity to the University of Saskatchewan and major sources of employment.

Highest one-bedroom rents found in Central zone apartments

Moishe Alexander says at $732 monthly, the mainly highrise apartments of the Central zone featured the highest average rent for one-bedroom apartments. Two bedroom average monthly rent was highest in the Northeast zone with rent of $945 monthly. Average monthly rent of $1,163 for threebedroom suites in the Northeast zone was the highest rent found for this suite type. The lowest overall average rent was in Southwest Saskatoon at $630 monthly. One-bedroom, two bedroom and three-bedroom average monthly rents were the lowest in Saskatoon. As stated previously, the Southwest zone rental housing stock experiences lower demand due to its condition.  Tenants in these neighbourhoods are highly mobile and have lower incomes restricting rent increases, thus contributing to maintenance and quality issues. The October survey included a measure that estimates the growth in rents for a fixed sample of structures and excludes newly built properties. This measure considers structures that were common to the survey sample for both the 2007 and 2008 surveys. The aim is a better understanding of rent changes in existing structures by excluding from the calculation the rents of newly built apartment buildings. Detailed information is contained in the methodology section at the end of this report.

For the Saskatoon CMA, the percentage change of average rent within a fixed sample was close to 20 per cent for all types of suites in all survey zones. Two-bedroom apartment average rents in all areas of the Saskatoon CMA increased 20.3 per cent while the average rent for one-bedroom suites increased 19.4 per cent.

Private rental market supply declines

Moishe Alexander says the attraction of homeownership relative to renting in recent years as well as other important factors have had the effect of reducing the size of Saskatoon rental market stock. According to Census data, rental units declined as a proportion of total dwellings between 2001 and 2006. While the number of private dwellings increased by 2.5 per cent, the number of rental dwellings increased by 1.5 per cent. CMHC’s annual Rental Market Survey shows that the Saskatoon privately initiated rental universe declined by 601 units between 2007 and 2008 because of rental unit conversion to condominiums, closure for renovations or demolition. In addition, there were a number of projects converted to public housing. There have been no additions to the private rental stock in the form of housing starts over the last year although there have been some new public housing and senior’s units added.

Rental Affordability Indicator

Moishe Alexander says CMHC’s rental affordability indicator shows a decline in affordability of Saskatoon’s rental apartments. The cost of renting a median priced twobedroom apartment increased 26 per cent in 2008, while the median income of renter households grew at 5.7 per cent. The rental affordability indicator in Saskatoon stands at 92 for 2008.

RENTAL MARKET OUTLOOK

Vacancy rate forecast to increase in 2009

Moishe Alexander says CMHC is forecasting an increase in the average vacancy rate to two per cent in October 2009. Renters are doubling-up in order to compensate for rising rents thus contributing to the slight increase in vacancy. In addition, newer investorowned condominiums are drawing off demand from existing rental projects. Saskatoon’s resale market is softening and price increases have slowed. This should lead to more rental households moving to homeownership. Notwithstanding the influence of the above factors that will reduce demand, Saskatoon’s employment continues to grow encouraging inmigration and supporting rental demand. CMHC is forecasting employment gains of 2,300 jobs in 2008 followed by 1,800 in 2009.  These increases are considerably more subdued than the surge in employment seen in 2007 that saw 7,500 jobs created but the rental market will nonetheless benefit from this growth.

Rents rise at a slower pace in 2009

Moishe Alexander says competition from the home ownership market and condominium rental units will slow the pace of increase in average rents over the forecast period. Our forecast calls for an increase of $19 monthly in 2009, bringing the average rent for a two-bedroom suite to $860 by October 2009. The need to compensate for operating and maintenance cost increases experienced in previous years will be a factor behind the increase in average rents.

Condominium and other secondary rental units – Survey Results:

Moishe Alexander says the Saskatoon version of CMHC’s October Rental Market Survey, which covers private row and apartment structures with three or more units, now includes information on the secondary rental market. The additional information should help to provide a more complete overview of all rental markets in the Saskatoon CMA.

The survey considers the following types of units: rented single detached houses, rented double (semi-detached) houses, rented freehold row/town houses, rented duplex apartments, rented accessory apartments, and rented apartments that are part of a commercial or other type of structure containing one or two dwelling units. The methodology section at the end of this report provides more information on the Secondary Rental Market Survey.

The Province of Saskatchewan has recently initiated a program to encourage the creation of these types of units in private households.

Vacancy rate of rental condo apartments similar to purpose built rental

Moishe Alexander says table 4.3.1 provides information on the size of Saskatoon’s condominium rental apartment market. Of the 7,260 units condominium units sampled, 834 or 11.5 per cent were rental units. The average vacancy rate of 1.8 per cent in Saskatoon’s rental condominium apartments was similar to the vacancy rate of 1.9 per cent for purpose built rental apartments. At this time the size of the rental condominium apartment universe does not allow CMHC to determine the average rental rates for such units.

The survey found 11,766 households in other secondary rental units of various forms including single and semi-detached, row and other accessory suites.  Average rent for all of these types was $888. Average rents varied from $869 for accessory suites and $895 for row and semi-detached units. Average rent for single detached units was $890.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64443/64443_2008_A01.pdf