I had a chance to speak with Robyn Adamache, the Senior Market Analyst at the BC Market Analysis Centre of CMHC. Robyn has more than ten years experience in charting and analyzing the data so it was a good chance to get a sense of where we’ve been, and where we’re going.
There are several key statistics that reflect the rental market for the Vancouver and each year when I speak with Robyn I try and get a sense of the current market and look a little into the future.
One of the most important statistics for those of us that own apartment buildings is vacancy rates. The higher the vacancy rate the more instability in the market, and higher vacancy rates mean a downward pressure on rents. Fortunately there is still positive population pressure on the market so the vacancy rate declined to 1.4% from 1.9% for 2010. Compared to the national average at 3.1%, and other major cities in Canada with vacancy rates in the 0.6% (Regina,SK) to 8% (Windsor, ON) range. Of all the major metropolitan areas Vancouver maintained its number one ranking for highest average monthly rents for a two bedroom apartment at $1,237
A great deal of strength in the Vancouver major has to do with the influx of people from outside the province, and outside the country. In 2010 more than 43,000 people immigrated into Vancouver, compared with 38,000 projected for 2011. All of those people provide the market for new housing, and rental housing especially, in Vancouver.
Another reason for the strength of the Vancouver market is a brightening employment market. So far this year more that 30,000 full time jobs have been created in Vancouver, bringing employment up to pre-2009 levels. Adamache brought up one troubling statistic though: although Vancouver has added 30,000 jobs, the province of BC had only added 18,000 jobs total, which means that province still has a net loss of jobs over the last year.
I asked Robyn if there were any sectors that were driving the job growth and she indicated the business finance and administration, management, and trades and transportation were leading the sectors with each up about 4.5 %.
Another area of growth is the housing construction industry. Vancouver saw housing starts up 23% to a projected 17,000 for 2011. Of that total 13,000 were multi-unit condo and rowhouse starts. A key statistic that CMHC also tracks is the number of purpose built rental units out of the total, and this year saw a 71% increase from 2010 to 1437 units. This chart details the rise and fall of rental housing starts in Vancouver over the last ten years.
The last topic that Robyn and I talked about was rent increases. Last year the rent increases were in the 2.5% range, on track with allowable increases legislated under Section 22 of the Residential Tenancy Regulation. This year the Residential Tenancy Branch raised the allowable rent increases for 2012 to 4.3% and she anticipated that increase in market rents will be in the 4% range.
With all of the information that Robyn gave me, and with the data that I’ve gathered over the last 20 years, apartment buildings are still a great, low risk investment. Vacancy rates over the last ten years have remained in the 0.5% to 2.1% range. The Bank of Canada has indicated that lending rates will stay low for the foreseeable future, and with the volatile stock market and chaotic economic times, having an investment that holds it’s value and generates consistent income is a good thing. In short, if you’re in, its a good time to stay in, and if you’re thinking of purchasing, it’s a good time to get in.
Interview with Robyn Adamanche