Many renters have high-income jobs, but lack the $100,000 deposit to buy a condo
Michael Kane
Sun
Demand for greater Vancouver rental apartment buildings remains strong, despite rising prices and a steady supply of investor-owned condominiums for rent.
In the past two weeks, two multi-suite buildings — one in Coquitlam and one on Vancouver’s West Side — each sold within 24 hours of being listed.
“There are chronic shortages of rental housing product in all jurisdictions of Greater Vancouver, while demand [from landlords] remains insatiable,” David Goodman, a commercial realtor with Macdonald Commercial Real Estate Services, said Thursday. “As soon as we list something, within 15 minutes the phones start ringing.”
As tenants move into new condo towers, either as first-time buyers or renters, he said a new breed of investors is buying up older rental buildings to give them major upgrades and charge higher rents for the next tenants.
“If you profile the renter today in Vancouver, many have well-paying jobs and security of employment, but they don’t have the $100,000 down for the new condo,” Goodman said in an interview. “They can pay these higher rents and they want to pay these higher rents because they are getting a better unit.
“Today’s tenants are fussy. They want a nice suite.”
With substantial upgrades, he said a one-bedroom apartment in Kitsilano or South Granville can fetch $1,200 after previously renting for $800 or $850.
That helps landlords to justify paying prices up anywhere from six to 23 per cent this year, depending on the neighbourhood, according to the Goodman Report, an online publication and marketing service that tracks sales in the greater Vancouver apartment market.
While low vacancy rates are the norm in greater Vancouver, high home prices are making renting more attractive, especially for migrants from other parts of the country who face “sticker shock” when they consider buying here, said Cameron Muir, senior market analyst with Canada Mortgage and Housing Corp. in Vancouver.
New condos are helping to keep the lid on rents and little new rental housing is being built because high land prices and relatively modest rents make it economically unfeasible. In the downtown core, one survey found 47 per cent of investor-owned condos are rented out.
Goodman said 111 apartment buildings have sold in the past eight months, putting the greater Vancouver market on track to match last year’s sales of 162 buildings.
Compared to 2005, prices per unit are up in most neighbourhoods where there have been good sales volumes, although they can be dragged down when a particularly decrepit building is sold.
Goodman offered these examples:
– Maple Ridge: up 23 per cent to $79,272.
– South Granville: up 22 per cent to $186,537.
– Burnaby: up 17 per cent to $115,700.
– West End: up 13 per cent to $178,460.
– New Westminster: up 10 per cent to $95,919.
– East side: up 6.0 per cent to $111,865.
– North Vancouver: down 2.0 per cent to $124,930.
– Kitsilano: down 10 per cent to $157,643.
© The Vancouver Sun 2006
