Nanaimo Rental Market News
As a Realtor, I don’t handle rentals. I do however keep tabs on what is going on in the rental world by talking to the people who work in the property management section of my company and of course by noticing what kinds of properties are being rented to whom for how much when I visit them etc. After all, I do handle the sale of rental properties. When I saw the below article in the Nanaimo Daily News, I saw a couple of details that I thought could be expanded on or added so that’s what I’m going to do.
As the market shifted from a seller’s market to a buyer’s market starting about a year ago, we gradually started to see more and more rental vacancies. According to what I hear, there has been a glut of properties on the rental market that are of the sort that weren’t there not so long ago. You see, as the amount a given property could sell for started to drop, there were more and more owners of such properties who didn’t want to sell their property at a lower price so they decided to rent them out until values recovered. A solid plan, but the result was that a lot of “executive rentals” came out onto the rental market at around the same time. I’m told that they were the bulk of the vacancies that drove up the percentage of vacancies in the area for a time. After all, nicer properties are expensive to rent, and if you can afford to rent a place like that, you can also afford to buy your own place. And what better time to buy your first place than in a buyer’s market with incredibly low interest rates?
The article mentions that the CMHC data they are quoting doesn’t include basement suites and condos. Which in my opinion is kind of… well.. damning to the usability of the study’s numbers. You see, they represent a rather large portion of the rental market. Even more so in years to come as more and more homes in the Nanaimo area are being built, or modified to have suites downstairs to help people afford more home with that ‘mortgage helper’ downstairs.
And that, is my two cents for today.
By the way, despite the fact that rental vacancies are higher right now, I still think it would be a hell of a time to buy one if you are in the position to do so. As recently mentioned on this blog, interest rates are starting to go back up, and the way things are going (most of the Realtors I know, including me, are super busy right now) it might not be so long before the prices start doing the same. Better for an investor to buy in a buyer’s market than a seller’s one. Seems obvious, but so many people are wrapped up in what the TV says that they miss this one.
Vacancies are up, but so are rents
|The Daily News|
Despite a more-than-500% jump in Nanaimo’s apartment vacancy rate, the spike isn’t expected to boost affordable housing in the city.
The average apartment vacancy rate for April was 3.3%, a huge increase from 0.6% one year ago, according to the Canada Mortgage and Housing Corporation’s twice-annual rental market survey. Although Nanaimo’s traditionally tight rental market appears to be loosening up, it’s unlikely to translate into more affordable homes. The rental market survey shows that apartment rents increased slightly in the past year, climbing an average of 4.3% for bachelor suites and 1.9% for three-bedroom homes.
One property manager said rents for other accommodations not covered in the CMHC survey — such as condos or basement suites — have dropped slightly.
Economic woes, additional secondary suites and a cold winter that could have made more people think twice about moving may be behind the sudden statistical hike in vacancies.
The average rental apartment vacancy rate in 35 major Canadian cities survey by CHMC increased to 2.7% in April, from 2.6% in April 2008. In B.C., only two cities had vacancy rates lower than 2.0%: Victoria at 1.2% and Vancouver at 1.9%.
Nanaimo single mom Jasmine Seton said she was pleasantly surprised to find a new place to rent. She and her daughter moved out of their last place after it was broken into.
“I was expecting it to be a little more difficult. The prices are a little bit high right now, but other than that it was alright,” said Seton.
It took her two weeks to find a suitable place, but other people are still having a difficult time.
Social advocate Gord Fuller was surprised to hear that the vacancy rate had climbed.
“You wouldn’t know it from the people I talk to who are looking for places and find it difficult to find anything affordable,” he said, adding he’s noticed rents have gone up.
Jim Spinelli, with Nanaimo Affordable Housing Society, agrees people on low incomes are still struggling with housing.
He’s not sure that this trend means the city’s rental rates will come down significantly.
“Over time we can watch this and see if it’s a long-term trend, but I think it speaks to the whole state of the economy,” he said.
Apartment owners likely won’t be cutting rents anytime soon, according to City of Nanaimo social planner John Horn. Normally, these companies tend to offer other incentives such as free cable TV before cutting the cost of rent.
“Once they (rents) go up they tend never to come back down again,” said Horn. “That’s part of the difficulty, it creeps up over time.”
He said the vacancy hike is a symptom of the struggling economy. Adult children who are living with their parents might choose to stay with mom and dad a bit longer to save money, while those who live with a number of people in a single house might think twice before getting their own place.
Also, since CMHC numbers don’t include the “informal” rental stock, such as basement suites, the hike may indicate that more people are putting secondary suites into their homes. Horn said that over the past year or two there have been more applications for basement suites — legalized by the city in 2005 — as part of building permits.
“Maybe we’re just getting to the point when a lot of them are now coming on-stream.”
Purpose-built rental housing is also more likely to be affordable compared to condos or secondary suites, said Robyn Adamache, a senior analyst with CMHC. But rents are unlikely to drop because they are already on the low-end.
Lindsay Widsten, property manager with Realty Executives, deals mostly with single-family homes and duplexes for rent. He said that the market started to get soft in November, but puts the vacancy rate of his business at about 2%.
He said there have been some “insignificant” price drops of about $25-$50 per month to make the properties more appealing to renters.
Widsten suspects that a “long, harsh winter” is behind Nanaimo’s rising vacancy rate as people put off moving until the weather warms up. He said things began picking up again in May, and many of his vacant homes are now being rented.
Adamache, however, said weather wouldn’t skew CMHC’s statistics because the corporation compares April-to-April results that seasonally should be the same.
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By the numbers
Nanaimo average rents: 2008 2009
Studio: $488 $509
1 bed: $617 $594
2 bed: $748 $730
3 bed: $902 $885
Nanaimo vacancy rate:
April, 2008: 0.6%
April, 2009: 3.3%