Finding a place to rent these days is becoming increasingly hard for Calgarians and Dori Davidson-Revill is no exception.
It’s been a frustrating experience for many as the demand for housing is causing a ripple effect across the board with many landlords either choosing to sell or raising the rent prices to keep up with a hot housing market.
Davidson-Revill, his wife, and two children, aged one and four, are forced to look for a new home after their current landlord announced they are selling the property, giving the family until July 1 to move.
The pressure is on renters
With that day fast approaching, the pressure is on for the family of four to find a home in a tight rental market.
“It’s definitely not good. I’m tired. Waiting for rental properties to call back. A lot of stress. Definitely, a lot of fear because I’m thinking where are we going to be July 1 because I’ve got kids,” says Davidson-Revill, who is on AISH (Assured Income for the Severely Handicapped).
In fact, he thought he found a home this week but didn’t hear back after he told the landlord he was on AISH.
“It’s frustrating. We’ve been looking for about a month and a half so far. The people I’ve been talking to who are looking for places have kind of similar things happen to them,” he says.
“These guys are getting swamped by tons of people with interest in their apartments . . . I have never encountered this much trouble to find a place.”
He is fearful his family won’t be able to find a place before the deadline and he feels helpless, saying the government should step in to help.
A dwindling vacancy rate
Michael Mak, a senior analyst with the Canada Mortgage and Housing Corporation, says the most recent rental vacancy rate in the Calgary region was 5.1 per cent, which was down from 6.6 per cent in the fall of 2020.
He believes the rental market will continue tightening in 2022 onwards, as rental demand continues to return to the city.
Mak says the return of rental demand was evident as of the February 2022 Rental Market Survey, where the city saw decreased vacancy rates amidst significant rental universe growth.
“As employment conditions strengthen and workers shift back to an in-person or hybrid format, rental demand will grow for locations around the downtown core,” he explains, adding as these developments come into the market, the average two-bedroom rent will continue to increase at a modest pace.
“As rental demand returns, it’s likely that the supply of more affordable units will be taken up first, especially in inner-city locations.”
How does this market compare to the past?
Before the pandemic, Mak explains, a five per cent vacancy rate would be higher than what the city has seen compared to really tight markets, like in 2014 and 2013.
“But also we have to consider the fact that since 2014 a lot of rental supply has come online in Calgary and developers have been building a lot more rental housing in the past decade, especially compared to the 2000s,” he adds.
Mak confirms that it is tougher for people to find rental places these days.
“We are definitely going to see more demand — at least for occupancy — in Calgary at least for the next year,” he adds.
That will lead to price pressures not only from the increase in demand but also with newer units coming online.
“Newer units, of course, are pricier than say 50-year-old rental units in Calgary. And they’re also in much more demand.”
Increased rental rates for the foreseeable future
In the Rentals.ca fourth Annual Rental Market report with predictions from experts across Canada, Kendall Brown, manager of rental data for Alberta and Ontario for Zonda Urban, believes increasing rents will continue for the near future — especially as renters move back to urban areas.
She said rental rates in the city have surpassed pre-COVID numbers and are expected to continue to increase.
“With the increase in capital invested and available jobs, we expect an increase in migration from other provinces, creating demand for rentals,” Brown detailed in the report.
“During the last year, we have already seen an increase in migration as people are moving out of Ontario and British Columbia with remote working taking off and moving to Alberta due to the affordability factor.”
It’s all about supply and demand
Brown isn’t worried about rental supply meeting demand this year because favourable economic conditions are attracting intra- and inter-migration in Alberta.
“We will likely see the fallout from the anticipated interest rate hikes force some would-be home buyers to remain in the rental market,” she says.
“However, as mentioned before, a growing population with both inter-provincial and international immigration will help bolster both housing sales and rental absorption for the next 12 to 18 months.”
Brown says vacancy rates in Calgary are the lowest they have been since the fourth quarter of 2019 with an overall average of 7.8 per cent. Average rent per square foot slightly decreased 2.6 per cent to $2.22 at the end of the fourth quarter of 2021.
The decrease in rent was largely due to the seasonal demand that led landlords to pull back on incentive packages and rent discounts.
“We’ve seen a huge increase in demand for the downtown as many young professionals and students are returning to the more urban areas,” she says. “Vacancy in Calgary’s downtown has decreased by almost half of what it was in Q2-2021.”
Despite the challenges, there are condos and apartments for rent
Gerry Baxter, executive director of the Calgary Residential Rental Association, says the Calgary market does have a supply of apartments and condos for rent.
“Where we’re starting to see some difference in the suburbs, in the communities, with landlords selling their properties,” he explains.
“I don’t think there’s the same level of supply out there that there was. But the demand is there for the properties. We still have supply.”
Baxter says historically, the association’s survey of renters indicates that almost every year the number one reason for people leaving a rental property was because they wanted to buy a new home.
However, with rising mortgage rates, the demand for rentals will likely increase as many people will be priced out of homeownership.
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