There’s an old saying among opportunists: Strike while the iron is hot. The same goes for Calgary’s housing market, and in the case of rental properties, it’s best to scramble while the skillet is scorching.
That’s because, like the real estate sales market, availability for units in the rental sector is also scarce, largely due to the influx of workers into a scorching economy that graces Calgary.
The Calgary Real Estate Board reported the availability of units for sale at 3,100 in January. For renters, the pickings were slimmer according to the Canadian Mortgage and Housing Corporation. Most recent statistics gathered last October cited the vacancy rate at 1.3 per cent, or just less than 450 empty dwellings out of 34, 212 total rental units in the city.
“Some would look to purchase as mortgage rates continued to be low; while others preferred to rent − good news for our industry,” said Keith McMullen, president of the Calgary Residential Rental Association’s Winter 2013 edition of Rental Review. “We watched throughout the year as vacancy levels gradually began to decline and this trend has continued.”
And even though nearly 400 rental units were under construction at the beginning of 2013, pundits see no reason why the level of vacancies won’t exceed two per cent. Cutting into any potential vacancy increase is the fact that the overall rental inventory has also decreased from 34,818 to 34,212, over the past year, largely due to conversions to condominiums.
Taking into account what is actually available, the CRRA estimated that price increases have been modest at best ─ between two and five per cent throughout 2012. CMHC figures pegged the average monthly rent for a two-bedroom home in Calgary last October at $1,150. For downtown renters, the average cost was $1,240 for the same type of unit, the highest in the city. Both organizations predicted that as long as migrant workers keep moving to Calgary and scarcity remains an issue, price increases will remain steady.
“Landlords and property owners will continue to see interest in their rental units in 2013 as employers expand their payrolls and as people look for a place to call home after moving from another region,” said the CMHC in its Fall 2012 Rental Market Report.
Still, for all the advantages of owning a home, some consumers believe that renting is a lower-risk alternative to purchasing a home. The numbers bear out their logic. A down payment on a listed home must be no less than five per cent of the principal in order to qualify for financing, and considering the average price of a Calgary home in January was $434,942, a consumer would need nearly $22,000 in order to take possession. In comparison, renters wanting to live downtown would need to shell out slightly more than one-tenth of that amount to cover first month’s rent and security deposit.
Although the CERB declared that more people are choosing to become homeowners these days, the CRRA says there still remains a significant population in Calgary that still prefer to rent. Said McMullin in his CRRA quarterly column, “There is reason for optimism as we move into 2013.”