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HOUSING MARKET INFORMATION RENTAL MARKET REPORT Vancouver CMA CANADA MORTGAGE AND HOUSING CORPORATION Date Released: 2017 The overall vacancy rate*... West Vancouver North Vancouver DM INCREASED to (! (! Below CMA North Vancouver CY Tri-Cities % Similar to CMA (! (! Maple Ridge/ Above CMA University Endowment Lands 0.9 Van c o u ve r C i ty (!Pitt M eadows (! (! (!Burnaby City (!N ew Westminster The average rent is*... (!Richmond Surrey Below CMA (! Langley City and Langley DM (! Delta $1,297 Similar to CMA (! Above CMA UP by 5.9% (!White Rock PRIMARY RENTAL MARKET (by bedroom type) “Low vacancy rates Bachelor One bedroom Two bedroom Three or more bedrooms due to migration and employment growth, % % % % coupled with climbing 0.8 0.9 1.0 1.6 prices for entry-level Vacancy Rate Vacancy Rate Vacancy Rate Vacancy Rate ownership housing, put strong upward $ Avg. $ Avg. $ Avg. $ Avg. 1,060 Rent 1,223 Rent 1,552 Rent 1,801 Rent pressure on rents.” Eric Bond Principal, Market Analysis (Vancouver) *CMHC collects data on the primary and secondary rental market annually, in the fall. These data refer to the primary rental market, which only includes rental units in privately- initiated apartment structures containing at least three rental units. The secondary rental market covers rental dwellings that were not originally purpose-built for the rental market, including rental condominiums. The primary vacancy rate and rent level is based on all surveyed structures, while the rent increase is based only on structures common to the survey sample in both the current and previous year. Rental Market Report - Vancouver CMA - Date Released - 2017 Key analysis findings: more expensive areas and either remained flat or fell slightly in more SUBSCRIBE NOW! Despite record construction of modestly priced areas. Despite Access CMHC’s Market Analysis new units, strong demand for increased rental construction, the Centre publications quickly and rental accommodation kept the overall vacancy rate has remained conveniently on the Order Desk at vacancy rates below 1% for both under 1% for three years. www.cmhc.ca/housingmarketinformation. 1 View, print, download or subscribe to primary rental apartments and get market information e-mailed to rental condominium apartments. you on the day it is released. CMHC’s Employment growth and electronic suite of national standardized The rapid increase in entry-level migration are the main products is available for free. home prices and higher migration to the region have contributed to contributors to growing rental demand. rental demand likely results from a higher share of migrant households to the region For the third consecutive year, Employment in the Vancouver renting and a slower movement average rents increased faster CMA continues to grow, with total of households from rental into (5.9%) than the provincially- employment increasing 2.7% in the homeownership due to rising prices. allowable increase (3.7% in 2017). past 12 months to October 2017. The In the City of Vancouver, fully three- persistently strong job market has quarters of net new households Prospective tenants face higher contributed to the unemployment rents than long-term tenants, between 2011 and 2016 were renter rate falling to 4.3%, one of the households. with the average rent for vacant lowest among major centres across units being 11% higher than the Canada.2 The strength of the local average rent for occupied units labour market coupled with the Rising prices of entry-level in October 2017. relative weakness seen in other ownership housing puts provinces, particularly Alberta, pressure on vacancy Vacancy rates remain has been the main factor in the low, divergence across substantial year-over-year increases As reported in CMHC’s 2017 Housing in net interprovincial migration to the Market Outlook for Vancouver, areas emerges Vancouver CMA. the resale housing market has been The rental market continues be operating at “two speeds” since the According to recently released very tight in the Vancouver Census middle of 2016. While price growth 2016 Census data, 59% of net new Metropolitan Area (CMA), with in the single-detached home segment households added to the Vancouver the vacancy rate for purpose-built has slowed in the past year due to CMA between 2011 and 2016 were apartments remaining below 1% to many buyers being priced out of the renters, compared with 32% in the stand at 0.9% in 2017. In general, market, apartments and other more preceding five-year period (Table 1). vacancy rates moved up slightly in affordable units have seen rapid and The near doubling of this measure continuing price growth through 2017. Table 1. Share of renter households in the Vancouver CMA as a portion of total households and net new households, 2011 and 2016 Renter Household Share of Net New Renter Household Share of Total Households (%) Net New Households (%) 2011 2016 2006 to 2011 2011 to 2016 Vancouver CY (City of) 51 53 40 76 Burnaby CY 37 38 19 61 New Westminster CY 44 44 25 47 North Vancouver CY (City of) 46 47 40 65 Surrey CY 27 29 40 46 Vancouver CMA 35 36 32 59 Source: Census 2016, 2011, 2006, Statistics Canada; CMHC (calculations) 1 The survey is based on privately-initiated rental apartment structures of three or more units. 2 Labour Force Survey, Statistics Canada 2 Rental Market Report - Vancouver CMA - Date Released - 2017 Figure 1 Sustained low vacancy rates put upward pressure Monthly Rent and Carrying Cost of Ownership on same-sample rents3 Vancouver CMA $3,000 $103k Reflective of the tight rental market, $63k $78k $85k same-sample average rents for $62k $67k $69k $70k $74k $2,500 $70k $67k primary market rental units increased $2,000 by 5.9% for all bedroom types $1,500 within the Vancouver CMA over last year. This represents the fourth $1,000 consecutive year average rents have $500 increased faster than the provincially- $0 allowable increase4, which suggests 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 that landlords are able to increase Average Rent - Primary rents to market levels that are now Average Rent - Rental Condominium much higher than those previously Carrying Cost of Median Condominium Apartments (Strata) paid by long-term tenants. 20 per cent Down Payment - Median Condominium Apartments Sources: CMHC Rental Market Survey, CMHC Secondary Rental Market Survey, REBGV, FVREB. Rental rates can be Internal calculations by CMHC. materially higher for Note: Carrying cost includes mortgage payment, median condominium (strata) fees and median property taxes. vacant units Current renters looking to purchase With rates now beginning to rise, The average rent for vacant units their first property, typically an some renter households will find was 11% higher than the average rent apartment condominium, face two these carrying costs unaffordable and for occupied units in the Vancouver growing barriers: rising carrying costs will be looking to rent long term. CMA, suggesting that market rents and rising required down payments. Rising entry-level home prices also currently faced by prospective tenants Carrying costs had been relatively flat mean that a larger down payment are seeing strong upward pressure since 2007 as modest price growth is required for home purchase. As due to the low number of vacancies was offset by falling mortgage rates; a result, some renter households in the market (Table 2). This also however, since the second half of may choose to stay in rental housing suggests that longer term tenants 2015, prices have grown quickly longer to save for their down with lower-than-market rents may be with carrying cost increasing despite payment – further adding to demand. less inclined to move to a different record low mortgage rates (Figure 1). Table 2. Average rent of occupied and vacant apartment units Average Rent ($) of Occupied and Vacant Apartment Units 1 Bedroom 2 Bedroom Total Occupied Vacant Occupied Vacant Occupied Vacant Vancouver CY (City of) 1,325 a 1,442 a 1,857 a 2,107 a 1,388 a 1,547 a Burnaby CY 1,102 a 1,061 a 1,381 a 1,289 b 1,178 a 1,145 a New Westminster CY 989 a 904 b 1,335 a 1, 311 b 1,079 a 1,081 b North Vancouver CY (City of) 1,219 a 1,264 b 1,585 a 1,506 c 1,333 a 1,348 c Surrey CY 908 a 943 b 1,077 a 1,110 a 1,005 a 1,043 a Vancouver CMA 1,223 a 1,302 a 1,551 a 1,745 a 1,296 a 1,435 a Source: CMHC Rental Market Survey Note: Data Reliability indicators (a,b,c) explained in the Methodology 3 This is a measure that estimates the rent level movement. The estimate is based on structures that were common to the survey sample for both the previous year and the current Rental Market Surveys. The change in rent in existing structures is an estimate of the change in rent that the landlords charge and removes compositional effects on the rent level movement due to new buildings, conversions, and survey sample rotation. However, some composition effects still remain e.g. rental units renovated/upgraded or changing tenants because the survey does not collect data to such level of details. 4 The BC Residential Tenancy Branch imposes tenant-based rent guidelines in BC. For 2017, the allowable rent increase was 3.7%. When a unit turns over to a new tenant, the landlord is free to set a new rent amount at the market level. 3 Rental Market Report - Vancouver CMA - Date Released - 2017 Figure 2 Apartment condo vacancy rate increases Under Construction Inventory of Rental Units (In Structures with >5 Strong rental demand, coupled Units) as a Share of the Universe of Rental Units with limited additions to the stock of rental apartment condos, kept 6,000 4.9% 4.7% vacancy rates below 1%.