Rental vacancies fall across Western Canada as demand rises

Peter Mitham
Western Investor

Most market segments saw rents increase as demand outstripped new supply

Strong tenant demand helped push down rental vacancies across Western Canada despite new construction, underscoring the strength of the sector.

Calgary and Edmonton led Canada with the strongest growth in occupied units last year, according to the latest rental market report from the Canada Mortgage and Housing Corp., even as Calgary led the country in terms of new units added.

The number of occupied units increased by 10.7 per cent in Calgary last year outstripping 8 per cent growth in the number of purpose-built rental units expanded.

Vacancies dropped to 2.7 percent, the lowest level for the city since 2014.

“Record migration into Alberta largely supported rental demand, while increases in supply were not enough to balance it out,” CMHC reported.

This pushed the average rent for a two-bedroom purpose-built rental apartment to $1,466 per month, up 6 per cent from last year. This was the strongest increase seen of any Prairie market. Investor-owned condominiums also saw rents increase, rising to $1,648 a month.

“With Calgary’s economy growing beyond pre-pandemic levels, the rental market tightened to conditions not seen since Alberta’s last economic boom,” Michael Mak, a senior analyst with CMHC noted of what lies ahead for 2023.

The shift in Calgary outpaced that in Regina, the only market in Western Canada to see zero net growth in its rental stock in 2022.

The lack of growth coupled with a 4.1 per cent increase in occupied units cut vacancies in the purpose-built rental sector by more than half to 3.2 per cent, CMHC reported. Meanwhile, the average monthly rent for a two-bedroom apartment increased 3.3 per cent to $1,186.

But with no new purpose-built units, leasing activity has shifted to investor-owned condos, which often command a premium due to their location and amenities. However, even these have seen limited new construction.

“Higher building costs and supply-chain issues continue to hamper investment and limit rental supply growth,” CMHC reported.

This has pushed rents for investor-owned condos to an average of $1,467 a month, up 14.7 per cent versus a year ago. This is contributing to deteriorating affordability for the third of Regina households that rent as well as the growing tide of newcomers to the city. Regina led the province in terms of new households last year.

Winnipeg, where vacancies were on par with Calgary at 2.7 per cent (down from 5.1 per cent last year), saw two-bedroom rents increase the least of any city in Western Canada – up just 1.5 per cent to $1,350 a month.

A strong economy and rising ownership costs for local housing contributed to stronger demand for rental housing in Winnipeg. Strong international migration also contributed to population growth and rental demand.

The number of occupied units in the city increased by 6 per cent, according to CMHC, outstripping net 3.5 per cent growth in new purpose-built rental units.

Overall, trends in Western Canada pointed to the region’s strongest rental market since 2014 as strong economic growth fuelled demand and high construction costs limited additions.

With most market segments seeing rents rise – the one exception being investor-owned condos in Winnipeg, which saw average rents fall 7 per cent to $1,301 a month – the outlook for landlords is bright.

© 2023 Western Investor

Metro Vancouver’s rental vacancy rate drops as demand, prices soar: CMHC

Claire Wilson
Western Investor

The rate for purpose-built rentals in the region fell below one per cent last year, while the average asking rent for vacant units is 43 per cent higher than occupied ones

Rents for vacant units in Metro Vancouver increased more sharply than those of currently tenanted units over the past year, CMHC reported.

Metro Vancouver’s purpose-built rental vacancy rate fell below one per cent in 2022 as rental demand outpaced supply, according to Canada Mortgage and Housing Corp.’s (CMHC) Market Rental Report.

High homeownership costs and migration to the Metro Vancouver area drove rental demand in 2022, according to the CMHC. As a result, the purpose-built rental apartment vacancy rate decreased from 1.2 per cent in 2021 to 0.9 per cent in 2022.

Increases in mortgage rates also contributed to the decline in availability, as more renters had limited capacity to transition to homeownership, according to the report.

“Strong demand for limited rental units means low vacancy rates, rising rents and growing inequality between long-term leaseholders and newcomers,” said Eric Bond, senior specialist with CMHC.

According to the report, international arrivals to B.C. doubled in the first half of 2022, with most of newcomers settling in the Metro Vancouver region.

As migration into the province surged, the borrowing capacity of a Vancouver worker aged 25 to 54 making an average wage decreased by nearly a quarter, or about $100,000, in 2022, said the report – further compounding the issue.

Overall average rent, including both units that are occupied and units that are vacant, increased by 6.3 per cent compared to the previous year, according to Bond.

The gap between rents for vacant units and paid-for occupied units also widened last year as average asking rents for vacant purpose-built rentals soared. The average asking rent for a vacant unit was 43 per cent higher than the overall average rent for occupied units, the report said. In 2021, the gap was 10 per cent.

Last year, the average monthly price to rent a two-bedroom purpose-built rental in Metro Vancouver rose 5.6 per cent year over year to about $2,000. The average cost to rent a condo is approximately $2,500 per month.

Bond said that new renters paid on average 24 per cent more than the previous tenant for a two-bedroom unit in Metro Vancouver. When a unit turns over to a new tenant, the landlord can set a new rental amount that reflects the current market, he said.

“When demand is exceeding supply, we have some adjustment that can take place when those units do turnover. And one consequence of this is that it provides a disincentive to moving and so we noted a lower turnover rate as well,” Bond said.

In Metro Vancouver, the turnover rate is now 10.7 per cent, one of the lowest in the country, he said.

Despite the decline in vacancy, 3,805 purpose-built rental units were added to the regional market in 2022 – the highest annual increase since 1990, according to the CMHC. Four municipalities accounted for 87 per cent of this increase – Vancouver, Coquitlam, the City of North Vancouver and the District of North Vancouver.

“The vacancy rate went down and we’re seeing strong increases in rents, which means that demand is just that much higher. We’ll need to keep building more market rental, non-market rental and more affordable units in the coming years in order to meet the demand and have the housing system work well in terms of meeting the needs of renter households,” Bond said.

Despite the low vacancy rate for purpose-built rentals, the number of available condominiums for rent increased by 7,850 units, roughly 9.8 per cent. The increase in units resulted in an overall vacancy rate for condominiums that sits at 2.2 per cent in 2022, according to the report.

© 2023 Western Investor

How was the Greater Toronto Area housing market’s performance in 2022?

Ephraim Vecina
CMP

New report highlights market’s struggles

Over the course of 2022, the Greater Toronto Area saw its lowest level of new home sales since 2018, according to Altus Group and the Building Industry and Land Development Association.

The region saw a total of approximately 25,400 new home transactions last year, which was 29% lower than the 10-year annual average for the GTA. December activity accounted for only 563 new home sales, the second lowest level for the month after December 2008.

Condo apartment sales — which include those involving low, medium, and high-rise buildings, as well as stacked townhouses and loft units — amounted to 20,917, around 12% below the asset category’s 10-year average.

The single-family housing segment — including detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses) — totalled 4,483 sales in 2022, a significant 64% lower than the 10-year average.

“GTA new home sales started strongly in 2022 before easing in the second half of the year with annual sales sitting at a four-year low,” said Edward Jegg, research manager at Altus Group. “However, prices steadied in December after months of declines as buyer demand and builder supply were more closely aligned.”

Benchmark prices in December were at around $1.131 million for new condo apartments and at around $1.753 million for new single-family residences.

Total new home active inventory stood at 13,320 listings, including 11,590 condo apartment units (6.6 months of inventory) and 1,730 single-family homes (4.6 months of inventory).

Dave Wilkes, president and CEO of BILD, cited the high-rate environment and tighter monetary policy as the major drivers of the GTA market’s slowdown.

“With interest rates at the top of the cycle, the further 2% imposed by the minimum qualifying rate will almost certainly prove to be an insurmountable hurdle for thousands of new home buyers trying to finalize financing this spring,” Wilkes said. “The federal government needs to reconsider its approach to monetary policy so families can purchase the homes they need without artificial obstacles.”

Copyright © 1996-2023 KM Business Information Canada Ltd.

B.C. government raising payments for strata contingency reserve funds

CBC Staff
CBC Radio

The B.C. government is ushering in changes it says will help protect owners in strata developments at risk of higher insurance costs due to neglected maintenance needs.

As of Nov. 1, 2023, the minimum amount that developers and strata corporations must contribute to contingency reserve funds will be 10 per cent of the strata’s annual operating expenses instead of the current five per cent.

Contingency reserve funds are relied on for emergency expenses and maintenance work and are legally mandatory for strata corporations to maintain.

“The value of adequate contributions to the contingency fund and a well-implemented depreciation report for planning is critical in protecting a strata corporation’s assets and reducing the risk of future special levies,” said Tony Gioventu, executive director of the Condominium Home Owners Association of B.C., Tuesday in a statement.

According to the province’s Strata Property Act, owners of strata lots in a strata plan are members of that strata’s corporation. The corporation is responsible for managing and maintaining the property and assets, and its powers are exercised through a strata council.

There are approximately 34,000 strata corporations in the province, and according to the Ministry of Housing, Ravi Kahlon, most of them will not be impacted by the change.

Kahlon said a small number of strata corporations are underfunding their contingency funds and putting owners at risk of surprise fee hikes and insurance costs.

“While the vast majority of strata corporations are already meeting these requirements, we’re ensuring that those outliers are taking steps to protect themselves,” said Khalon.

The provincial government is also introducing changes to the Form B Information Certificate that discloses information about a strata and is often requested by potential buyers. As of April 1, 2023, that form must include a summary of the strata corporation’s insurance coverage.

“Everyone has a role to play in keeping the strata insurance industry in a healthy state, and that includes strata owners contributing enough to their contingency funds to ensure that their buildings are adequately maintained,” said Chuck Byrne, chief operating officer of the Insurance Brokers Association of B.C., in a prepared statement.

The B.C. government tabled legislation amending strata laws in 2020 to address the rising costs of strata insurance.

©2023 CBC/Radio-Canada. All rights reserved

B.C. saw a record $740M spent on mineral exploration in 2022

Nelson Bennett
Western Investor

Mineral production in B.C. totalled $18 billion last year, also a new record

Teck Resources’ Highland Valley Copper mine near Logan Lake, about 50 minutes southwest of Kamloops, is the largest copper mine in Canada.KTW

British Columbia had record spending on mineral exploration in 2022 and there are eight new mines or mine expansions in the queue, Premier David Eby said Monday at the opening of the Association of Mineral Exploration (AME) Roundup conference in Vancouver.

Eby said there was $740 million spent on mineral exploration in B.C. in 2022 – a record – and mineral production in B.C. is also expected to be a record: $18.2 billion.

That’s a $4.3 billion increase over 2021. That increase in value over 2021 was largely due to high metallurgical coal prices, said Gordon Clarke of the BC Geological Survey’s development office. Steelmaking coal prices hit a high of US$670 per tonne last year, and remains relatively high at close to US$300 per tonne.

B.C. has seven operating metallurgical coal mines.

Eby said there was an 84% increase in copper exploration in 2022, much of that concentrated in northwest B.C. in the so-called Golden Triangle.

Copper is among the critical minerals identified in Canada’s new federal Critical Minerals Strategy as key to both the digital economy and the energy transition, and it’s one mineral B.C. has in relative abundance. B.C. is Canada’s biggest copper producer.

Jonathan Price, new CEO for Teck Resources (TSX:TECK.B), which operates the Highland Valley Copper mine, said the estimated global demand for copper will grow by 4.7 million tonnes by 2030, thanks to the increased demand from the energy transition and greater urbanization.

“To put that into perspective, Teck’s Highland Valley Copper mine here in B.C. is Canada’s largest copper mine,” Price said. “Four-point-seven million tonnes would be the equivalent of building another 35 Highland Valley Copper mines in just seven years.”

But it can take a decade or two to take a new mine from discovery to production. Eby said a commitment he has made to speed up permitting for housing should also speed things up for resource industries like exploration and mining as well.

“For decades, our province has had a slow and complicated permitting process system,” Eby said.

The province is investing in new staff to work in permitting and to streamline the system.

“I want you to know these same investments have impacts on your industry as well,” Eby said.

Eby also said he has asked his new energy and mines minister, Josie Osborne, to expedite a provincial critical minerals strategy.

Eby warned that the political landscape is changing, as a result of government commitments to reconciliation with First Nations. For one thing, the Mineral Tenure Act is likely going to have to be amended as a result of what Eby called “a very serious legal challenge” by First Nations.

First Nations pressing for changes to the act want to be notified when anyone files a mineral claim in their traditional territory. That has created some concerns for prospectors who consider mineral claims a form of intellectual property, and therefore like to keep claims secret.

“I want to assure you that our government is committed to finding a way forward to address this issue,” Eby said. “We will be engaging with you as an industry to make sure that the regime works for you. But we will also be doing it in partnership with First Nations in our province.”

The NDP government has recently struck agreements with First Nations that essentially make them co-regulators. A consent based decision making framework developed with the Tahltan First Nation last year is one example. Expect to see more such agreements going forward, Eby said.

He urged prospectors and exploration companies to work with First Nations to gain their consent when doing exploration and prospecting in their traditional territories.

“The very first contact that nations have around economic development or a particular proposal in their community is your industry,” Eby said. “You set the tone. So if it’s a constructive and collaborative tone at the beginning, that leads to greater success down the road with mine development.”

© 2023 Western Investor

Vancouver Empty Homes Tax 2022 declarations open

REBGV Staff
REBGV

At a glance: (2 minute read)

• Vancouver property owners can now make their Empty Homes Tax status declaration.
• All owners need to make the declaration, even if they live in the home.
• Declarations are due by Feb 2, 2023.

Vancouver property owners can now start making their Empty Homes Tax (EHT) property status declarations for the 2022 tax year.

All residential property owners are required to complete a declaration every year, even if they live in their property or rent it out.

Over the coming weeks, declaration instructions are being mailed to property owners along with their advance property tax notice. Owners who have signed up to receive eBills will also receive their notice direct to their email inbox.

Declarations are due by February 2, 2023. 

Current tax rate three per cent

Properties declared or deemed vacant in the 2022 tax year will be taxed at a rate of three per cent of the property’s 2022 assessed taxable value. 

2023 tax rate five per cent

The rate for the 2023 tax year will increase to five per cent.

Declare online at vancouver.ca/eht-declare. Need help? Chat live with an advisor on the city’s website, or call 311.

Property owners can sign up for an online services account and opt to receive tax notices by email. They can also check their account balances, and access other important tax information at Vancouver.ca. 

Late declarations for 2021

Owners who failed to declare their property status for the 2021 tax year have until July 5, 2023 to make a late declaration in the form of a Notice of Complaint. A $250 bylaw fine applies to late declarations.

Speculation and Vacancy Tax

The City of Vancouver’s EHT is separate from the provincial government’s Speculation and Vacancy Tax. For more information about the province’s tax, visit gov.bc.ca/spectax. 

©’REBGV’ is a registered trademark.

Toronto housing supply gets another boost from governments

Ephraim Vecina
CMP

New housing complex to offer units for in-need Torontonians

Federal and local governments have announced a joint investment of nearly $3 million to support the development of new affordable housing supply in Toronto.

The custom-designed building, which is situated at 130 River Street, will be owned and operated by L’Arche Toronto Homes.

The housing complex consists of two suites offering single-occupancy rooms, all intended for individuals with intellectual disabilities. The project also includes affordable housing for low-income live-in assistants.

“The project aims to provide safe, accessible, and intentional living accommodations and a barrier-free and inclusive environment,” according to the Canada Mortgage and Housing Corporation.

“This affordable, fully accessible and barrier-free home, in a specially designed condominium unit, will allow us to welcome new members who have physical and other disabilities,” added Raphael Arens, executive director of L’Arche Toronto Homes. “As well, individuals will have the opportunity to age ‘in place’ longer with opportunities for personal growth and be actively involved in the community surrounded by a complete circle of support.”

Work on the building is nearing completion, and it is expected to begin operations in April 2023.

Copyright © 1996-2023 KM Business Information Canada Ltd.

How did the Calgary housing market defy national trends?

Ephraim Vecina
CMP

Regional housing industry group highlights the market’s strengths

In a stark reversal from the deceleration trends seen in most Canadian markets, the Calgary housing market registered elevated sales and double-digit price growth in 2022, according to new data from the region’s housing industry group.

“Housing market conditions have changed significantly throughout the year, as sales activity slowed following steep rate gains throughout the later part of the year,” said Ann-Marie Lurie, chief economist at the Calgary Real Estate Board. “However, Calgary continues to report activity that is better than levels seen before the pandemic and higher than long-term trends for the city.”

Even a sales slowdown during the second half of the year was not enough to negate that year’s overall gains. Calgary saw a record-breaking total of 29,672 residential transactions in 2022, CREB reported.

How expensive are homes in Calgary now?

“At the same time, we have faced persistently low inventory levels, which have prevented a more significant adjustment in home prices this year,” Lurie added.

As of December, the region had 2,214 units available in inventory, marking its lowest level for December in over a decade, the board said.

Benchmark prices stood at $518,800 in December, representing a decline of nearly 5% from the peak seen in May 2022 but almost 8% higher on an annual basis.

“The housing market in 2022 generally outperformed expectations both in terms of sales and price growth,” CREB said.

Copyright © 1996-2023 KM Business Information Canada Ltd.

Calgary Herald building sold for $17.25 million

Western Investor Staff
Western Investor

The 391,000-square-foot building was bought by U-Haul Canada, which also purchased the Calgary Sun building in 2020. zIt will be used as a storage facility and truck rentals.

Cresa, Calgary, for Western Investor

Property type: Office building

Location: 215, 16 Street S.W., Calgary

Size of building: 391,000 square feet

Sale price: $17.25 million

Date of sale: January 18, 2023 (announcement).

Buyer: U-Haul Canada, Toronto

Brokerage: Cresa, Calgary

Broker: Bob MacDougall

© 2023 Western Investor

22-lot Langley land assembly sells for $24.4 million

Western Investor Staff
Western Investor

The single-family lot assembly totals 3.4 acres and sold in late 2021 for higher-density multi-family rental development

Re/Max Little Oak Realty, Surrey, B.C., for Western Investor

Property type: Land assembly

Location:  5300 53 Avenue and 53A Avenue and 200 and 200A Street Michaud Crescent, Langley, B.C.

Number of lots: 22

Total land assembly: 148,939 square feet

Total land size in acres: 3.41 acres

Sale price: $24.42 million

Date of sale: November 30, 2021

Brokerage: Re/Max Little Oak Realty, Surrey, B.C. and eXp Realty, Surrey, B.C.

Brokers: Mark Cumming (Re/Max) and David Crawford (eXp).

 © 2023 Western Investor