Homeownership is becoming increasingly difficult to attain in
Calgary, but the city’s rental market is on fire.
In fact, the vacancy rate in the Calgary rental market decreased
from 6.3% in 2017 to 3.9% last year.
“The way this is connected to the rental market is a function of
these affordability challenges we’re seeing in the market, and
given the pressures put on an individual’s affordability—and we
know interest rates are higher—they are renting longer,” said James
Cuddy, a senior analyst with the Canada Mortgage and Housing
Corporation.
Another reason for the buoyant rental market is that
interprovincial migration was positive through the first three
quarters of 2018—a stark contrast to the previous 2.5 years of
negative growth—and that has also done its part to push the vacancy
rate down.
“We’ve also seen some steady growth in terms of international
migration, so it’s contributing to higher demand for rentals in
Calgary,” added Cuddy.
The outlook for ownership, according to CMHC, isn’t as
rosy.Inventory levels are high in the city and builders have
started scaling back production.One reason for languid sales is
high unemployment and low disposable income.
“The general economic recovery we’ve seen since the last
recession has been relatively slow;unemployment rates remain
elevated and a lack of personal growth in
Homeownership is becoming increasingly difficult to attain in
Calgary, but the city’s rental market is on fire.
In fact, the vacancy rate in the Calgary rental market decreased
from 6.3% in 2017 to 3.9% last year.
“The way this is connected to the rental market is a function of
these affordability challenges we’re seeing in the market, and
given the pressures put on an individual’s affordability—and we
know interest rates are higher—they are renting longer,” said James
Cuddy, a senior analyst with the Canada Mortgage and Housing
Corporation.
Another reason for the buoyant rental market is that
interprovincial migration was positive through the first three
quarters of 2018—a stark contrast to the previous 2.5 years of
negative growth—and that has also done its part to push the vacancy
rate down.
“We’ve also seen some steady growth in terms of international
migration, so it’s contributing to higher demand for rentals in
Calgary,” added Cuddy.
The outlook for ownership, according to CMHC, isn’t as
rosy.Inventory levels are high in the city and builders have
started scaling back production.One reason for languid sales is
high unemployment and low disposable income.
“The general economic recovery we’ve seen since the last
recession has been relatively slow;unemployment rates remain
elevated and a lack of personal growth in disposable income has
hurt the ability to move into homeownership and prompted more
people to look into more affordable options,” said Cuddy.
John Hripko, a sales agent with Royal LePage Benchmark, says
that the B-20 mortgage stress test has ravaged ownership prospects
for many would-be purchasers.
“It prevented a lot of people from qualifying for a mortgage
because their affordability went down by 15-20%,” said Hripko.“I
think the rules are realistic from the standpoint of preventing
people from being in over their heads.It’s short-term pain for
long-term gain.”
But while B-20 removed many buyers from the market, it may have
also contributed to decreased debt levels.
“The Bank of Canada broke it down regionally and the share of
these highly indebted borrowers had decreased after
implementation,” said Cuddy.“However, the caveat is it’s difficult
to truly attribute these trends to the stress test because of other
things going on, particularly interest rates, which could
be—Canada-wide—contributing to the decline of highly indebted
borrowers.”
Are you looking to invest in property?If you like, we can get
one of our mortgage experts to tell you exactly how much you can
afford to borrow, which is the best mortgage for you or how much
they could save you right now if you have an existing
mortgage.Click
here to get help choosing the best mortgage rate
Read more https://www.canadianrealestatemagazine.ca/news/rental-demand-in-calgary-remains-voracious-254215.aspx