rental prices and "spring turnaround"

[seanwg]

Hi,

Anyone have any comments on this -

I'm from Calgary, and currently renting. I moved back here from overseas last year at the "Peak".

There are looking on the rental websites, tones and tones of units available now. People are being laid off here fairly regularly. When I moved back here it was pretty slim pickings. We found where we were after much searching.

My wife and I were out looking at houses yesterday; they are still overpriced and talking to this one fairly aggressive realtor - "in 3 months prices are gonna sky rocket!! get in now". I dunno how! The 0% down 40 year greater fools are gone.

I emailed my landlord last night asking what was he going todo with the rent, and he is only willing to drop it $100 a month (I'm currently renting a 2 bedroom condo for $1795 in downtown calgary) - he says this spring when my lease is up calgary is going to be booming. I emailed back max I'll do is $1550 - no response yet.

Are these guys nuts?

The building I live in has 2 bedrooms for rent now, for $1600 - and there are a pile more coming up. He apparently owns 3 units in this building - the other tenants for reasons unknown signed up for 2 year leases in November. Other units include free power, cable or 1 month of free rent.

So how many people think a spring turn around is coming? The only thing I see coming in spring is a dolly to move my stuff in the building!

Sean

[iheartdesign]

Rents will always be acceptable as long as someone is willing to pay it. If you're not happy with the rent, look somewhere else. I'm not trying to be sarcastic, but just putting it simply - Although there has been a change in the market, rentals are always going to be a preffered method of some. It's going to be almost impossible for anyone on RFD to comment on whether your rent is worth it or not as we don't know what location it's in, what it looks like etc.

Dropping your rent $100 is a pretty substantial lowering of cost on the landloards end. He still (likely) has a mortgage to probably pay, so reducing his income isn't probably something he is probably up for.

In terms of housing, although there has been a slowdown, a house went up for sale across the street from me, and the day the sign went up, dozens of showings were being done. In my inexperience opinion, there are less houses on the markets, but still buyers.

[Psycho44]

actually houses on the market has gone up a lot and buying houses has gone down. I think in hard times people are looking for good deals on houses.

[canehdianman]

Wow, I live in the beltline in Calgary and am paying $1000 for a 2BR. I'm planning on buying a place this summer/fall so I'm not really looking into negotiating a lower rent, but if I was paying that much I would be!

I would assume you are directly downtown in a much newer/nicer place than I am, but still, that's a hefty chunk of change.

[canehdianman]

I will also disagree with the posters above me.

Here is Calgary I have seen prices come down rather substantially in the past 3 months. Probably 10-15% lower already, and still dropping.

House prices here went so high so quickly that no one can afford them anymore. Everyone who could got in before the 0 down, 40 year mortgages were ended.

Now all that's left is us young folks who laughed at our friends buying downtown condos for 450k and saved our pennies instead.

I dare say we'll be getting some good deals for the next 6 months.

[hugh_da_man]

What's the vacancy rate at nowadays here in Calgary? Most landlords I've dealt with wouldn't lower their prices unless they absolutely had to. The benefit to renters right now could be all the people who bought houses and are turning their condos into rental properties instead of selling them in the slow market. You might be able to get a deal from someone stuck with two mortgages.

If your landlord doesn't bite at the $100/month drop then move.

One thing I don't understand is this part

People are being laid off here fairly regularly.

I really haven't seen that many people laid off in Calgary thus far. What sectors are these people in? Also, how would mass layoffs impact the rental market? I'd actually expect rental prices to stabilize since people losing their jobs will lose their houses and be forced into the rental market.

EDIT: Also, the spring turnaround sounds fake to me. Most places are vacant in spring due to students returning home for the summer. If anything, the summer into August would be when you'd expect prices to "turnaround".

[Rudee]

$1795 for a 2bdr condo in Calgary? I live in Calgary and still find that price very high.

[stealth]

Dont expect a drop in house prices to correlate with a drop in rent. Its often the opposite. Demand for houses drops, people dont get financing or are leary of buying in case they drop even further, and so look to renting instead.

Unless there is a mass exodus out of the city you live in, things shouldnt change by much, except in the higher end buildings.

Here's an article on the rental market currently:
http://www.thestar.com/article/587424

"Renting's low cost, high demand
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Rates are shrinking in Toronto but competition for units is increasing

Feb 19, 2009 09:27 AM
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Jennifer Brown
Special to the Star

It's actually cheaper to rent in Toronto than Vancouver or Calgary, but good luck finding a place as more people give up the hunt to buy a home and play it safe by renting.

"Typically Toronto has some of the highest rents in the country, but it is now being surpassed by cities like Calgary and Vancouver, which now have average two-bedroom rents much higher than Toronto," says Mike Chopowick, manager of policy with the Federation Rental-Housing Providers of Ontario (FRPO), based in Toronto.

Recently the FRPO gathered its members together to discuss the findings of the annual CMHC Rental Market Report.

According to research from Canada Mortgage and Housing Corp., in October 2008 the average two-bedroom private apartment in Toronto rented for $1,095, less than in Calgary ($1,148) and Vancouver ($1,124).

"That is low," says Chopowick, referring to Toronto's average monthly rent, which is influenced by factors such as neighbourhood, amenities and proximity to transit.

Just one year before, two-bedroom apartments in Vancouver averaged about $1,051 while a similar place in Calgary was about $1,037. Toronto was the highest at that point at $1,073.

The condo market tells a slightly different story. The highest average rates for two-bedroom condominium rentals in 2008 were $1,625, while in Vancouver it was $1,507 and $1,293 in Calgary.

Vacancy in Toronto is shrinking, too – it was at 2 per cent in the fall of 2008 and CMHC isn't projecting a big change any time soon. In fact, 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 2007.

"In 2009, they project that might drop to 1.9 per cent, but it's not a large difference. Certainly we'd call it a very stable rental market – there's not a lot of fluctuations," says Chopowick.

In Ontario, the vacancy rate in October 2008 was 2.7 per cent – lower than it's been over the past four years.

"Historically, when talking about the long-term trend of vacancy rates from the 1970s to the 1990s, it's still on the high end," says Chopowick. "In Ontario it's still rare if we see vacancy rates above 3 per cent."

The past four or five years have been unusual in that regard. In 2007 Toronto had a vacancy rate of 4 per cent.

One of the driving factors in demand has been the high price of homes, particularly in Toronto where bidding wars scared off some buyers and the fact that it may now be tougher for buyers to get mortgage approval.

"Certainly key demographics that play into that are first-time homebuyers and when they may make a decision to purchase a home," says Chopowick. "Young couples and families may rent first before they buy a home and in this market they may rent for a bit longer than usual."

"Another key factor CMHC points out is the net immigration rate. While Ontario is actually losing migrants to other provinces in Canada, if you look at overall immigration, the population of Ontario is increasing and that is also a factor in the rental demand," says Chopowick.

And despite the economic downturn, CMHC predicts that new rental supply will increase between 2009 and 2010 in response to changing conditions that include increased immigration plus the increased desire from some to rent rather than buy homes.

"Even though condo developers are scaling back their plans and some purchasers are walking away from their condo deposits, in the rental market there is a demand for rental housing. In Ontario we are seeing in the range of 2,000 to 4,000 private sector units built per year, which is less than you would have seen in the 1960s and early 1970s, but it's there to meet the demand," says Chopowick.

Another factor to consider is the difference between monthly rents and what the average monthly ownership costs for someone who owns a home.

"In that respect we're seeing a lot of affordability and value in the rental sector. In Toronto, the difference is $700 to $800 a month between the average homeowner monthly cost and the average tenant monthly cost," says Chopowick.

And while Toronto remains a steady rental market, other markets in Ontario, such as London and Barrie landlords are seeing increases in vacancy. Windsor had the highest vacancy rate at 14.6 per cent, while St. Catharines-Niagara hit 4.3 per cent and Oshawa 4.2 per cent.

CMHC says parts of the province would be more vulnerable to the recession than other parts and that will impact where people move and the demand for housing.

So with all this pressure on the rental market in the middle of a recession, will landlords be keeping rent hikes in line with the possibility of tenants' salary freezes, rollbacks or job losses?

"It's a key challenge for us. We're still seeing our key industry operating costs increase faster than what the rent guideline allows for. For 2009, we're limited to a 1.8 per cent rent increase and in 2008 it was 1.4 per cent and those are some of the lowest rent increase guidelines we've had in the history of rent control," he says.

Landlords can increase rents above 1.8 per cent if a tenant moves out of the apartment and a new tenant moves in, but for 70 to 80 per cent of the units in Ontario that 1.8 per cent hike applies.

"Most members aren't able to quickly recover the increase they are seeing in water rates in Toronto going up 9 to 10 per cent a year, and cost of labour for plumbers, electricians, drywallers – those are things our members are struggling with," says Chopowick.

The rental market in Toronto is also more competitive, he says. Landlords are aware of the need to invest in buildings, compete with each other and retain tenants and keep them happy.

"We've seen a lot of competition arise between rental housing and the condo market and housing market."

Learn how to make the most of renting after being a homeowner.


'

[jmaever]

Now all that's left is us young folks who laughed at our friends buying downtown condos for 450k and saved our pennies instead.I dare say we'll be getting some good deals for the next 6 months.

That's if you've invested your funds wisely! Many have seen their RRSPs dissapear, or reduced significantly. Harder time getting loans, so many of the young folks who purchased, are probably pretty thankful that they got into the market and into a good investment (property will always be a good bed long term) before their downpayments went kaput. JMO.

[j27lee]

That sounds high, even for Calgary. There will be a good number of condos on the market as more condos are completed and people who bought them to flip at completion will be pretty eager to sell. 1800/month translates to a 300k mortgage at 5%, if you plan to stick around, it might make more sense for you to buy.

That said, you should be able to find something much cheaper to rent.

[rotjong]

here is a news story for ya all

http://calgary.ctv.ca/servlet/an/local/CTVNews/20090213/CGY_condo_collapse_090213/20090214/?hub=CalgaryHome

[Friday5PM]

This morning I heard a snip discussion in the radio that some new home builders (here in Toronto area, I think they mentioned ajax) are selling their homes, which you can rent first for 3 years and 5% downpayment. At the end of 3 years then you have obtain a mortgage to purchase the property (deducting the rent and downpayment that you have paid).

haven't seen anything when googling...not sure if you have similar offer in Calgary