Rising rental pressure in Edmonton and Calgary means higher prices and fewer vacancies

If you're looking for a place to live in one of Alberta's major cities, it's getting more and more difficult.

Taylor Pardy, Senior Market Analyst at Canada Mortgage and Housing Corporation, said that in Alberta's major urban centers, rents are gradually increasing and He said vacancy rates are expected to decline. the next few years.

"We expect stronger rental demand, especially in Edmonton," he told Global His News on Wednesday. “Part of the reason behind that is rising mortgage rates, which may cause some people to delay buying decisions and possibly stay in rentals longer.

“The rental market Other factors in the economy – such as Alberta's increasing population growth from mid-2021 onwards with variables such as interprovincial migration – are supporting population growth in general, especially in large urban centers. , and historically correlated with declining vacancy rates and gradual increases in rents.”

Read more: Rising inflation worries me. interest.

According to his July 2022 Consumer Price Index (CPI) from Statistics Canada, the cost of buying or renting a home is rising. The report notes that July rents are rising faster than the previous month as mortgage costs rise as interest rates rise.

The mortgage interest cost index rose year-on-year for the first time since September 2020 (1.7%), according to a report released on Tuesday, while July rent fell to his 4.9%. %Rose. Compared to the same month in 2021. This rent increase comes after his 4.3% rise in June.

According to the CPI, rent growth was highest in Ontario and Alberta.

Rishab Mehra is an exchange student from India who started teaching at university. It's September in Alberta. He was looking for a place to rent off-campus with his roommates, but he says it was very competitive and frustrating.

"Some people get picked up quickly if they're near the university," he said. "We all went to places we liked very much. I was like, 'I just need to take a quick video of the place and I'll be back.'"

"Personally, it's been very difficult... I hope we can find a place as soon as possible."

said that power must also be considered.

``About $1,700 to $1,800 for an average two-bedroom apartment.

``I found a good place. I thought, let's see, but it didn't include utilities. Besides, there were no furnished apartments.

"I don't know how to bring all the furniture to that place and arrange the furniture all over the place."

Read more: The Canadian housing market is cooling as interest rates rise. But rents have never been higher

"This is a push and pull between the rental and condominium markets in every market we track. Analytics.

``Primarily based on affordability. I think we're seeing a bit of a perfect storm here because of the ongoing housing supply problem.

"This will lead to massive interstate migration to Calgary and Edmonton and even Alberta as a whole." Growing demand for more affordable homes.

More restricted housing markets mean fewer people will be able to own homes, Cornelius explained, pointing to a Statistics Canada report and renting instead.

“As housing values ​​rise, it will naturally shut out some price-sensitive consumers. When that happens, combined with successive increases in interest rates, people stay in the rental market.

"Or if interest rates rise, people may not be able to make their mortgage payments and sell their homes. Rent Move to unit.”

Read more: Canadian inflation hits 7.6% in July as gas prices fall

Zonda Urban's Q2 2022 rental take described recent rental demand in Calgary as "record-breaking." Overall, average vacancy rates fell to 5.6% (down 4.5% year-on-year) and average rents rose 13% ($2.57 per square foot).

Zonda Urban, Manager of Rental Data Markets for Alberta and Ontario, Kendall Brown, said:

"Especially in Calgary, the average monthly rental fee has increased by about $200 per month. Edmonton also has increased rental rates, but Calgary

Zonda Urban finds overall vacancies in EdmontonDown 2.9% from this time last year to 7.9%, with average rents up 4% from the first quarter of this year ($1.81 per square foot).

"This is the first time average rents have changed since Q3 2021," he said of Zonder Urban. Rent Look added.

"Incentives have also been withdrawn, so rental rates have increased," he explained Brown. "The current incentive is approximately 1 month free on a 13 month lease, whereas in previous quarters it was up to 2 months free on a 12 month lease."

READ MORE: Students face surge in rental market ahead of fall classes

according to Canadian As a province, Alberta pays the most in rent and utilities (heat, water, electricity) than any other province or territory, according to the Rental Housing Index.

The average rent and utilities for all incomes in Alberta is $1,279. $1,148 in BC, $1,021 in Saskatchewan, $891 in Manitoba, and $1,109 in Ontario. According to the CRHI database provided by the BC Non-Profit Housing Association, the average monthly rent and utility cost in Calgary is $1,355 compared to her $1,264 in Edmonton.

But comparing major Canadian cities: Brown and Cornelius said: Edmonton and Calgary are more affordable than Vancouver and Toronto.

Purdy said his 7.3% vacancy rate in Edmonton is still "significant in a historical sense. high,” and the number of new rental units is on the rise. The market helped meet demand.

"Housing is usually considered affordable if a household spends less than 30% of her pre-tax income on rent and utilities," he said, CRHI. increase.

READ MORE: 35,500 low-income Alberta families expected to benefit from 10-year rent subsidy program

Brown says that inner-city rental properties, in particular, are raising that threshold.

"I've heard from multiple building staff, especially in buildings around downtown Calgary, that they're currently looking at 40-50%. One bedroom (apartments)

"It's unbelievable that a 25-year-old spends only 30% of his monthly income, especially young professionals. There's no way to reach 30% affordability. Spend 50% of your monthly income on rent." It's sad because it's going to cost you a lot of money to spend."

Mr. Brown said that people decide their priorities and where costs and locations fit. said I need to.

Affordable units with views outside the city center," she said. I was. "The farther away from the city center, the more affordable."

However, as Canadians continue to face high consumer costs for food, goods, utilities and travel, Cornelius says budget decisions are important.

"In the next 6 to 12 months, the lessee must adjust their spending habits."

Hint

"Start looking early," said Brown. “I also think it all ducks in a row. To give a good review make sure the previous landlord is on board… everything is in place, a deposit and ready

Brown suggests casting a wider net.

"Not focused on a specific area. Maybe look a little further. Just apply for multiple applications.

"Flexible move-in dates also help. Certainly given the 12-month lease, it helps.”

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