Despite a steady wave of indicators that suggest Calgary’s economy is on the mend after a bruising recession, data released Thursday show the city is dealing with a glut of housing that hasn’t been so big in three decades, perhaps longer.In its latest census, the city reported that more than 23,600 housing units are vacant, up by 2,700 over last year’s levels, pushing the vacancy rate to 4.76 per cent, its highest peak in recent memory.
Census figures dating back to 1989 show the number and rate of vacancies have never been so high in the nearly 30-year period.
Economist Trevor Tombe said the high volumes of empty housing appear to be a lingering effect of the recent recession, but he said the glut will not be permanent.
Tombe said other economic indicators, such as employment, oil production and exports, continue to suggest Alberta’s recession ended last fall. The province has also attracted new residents, especially from other countries.
The latest civic census shows more people moved to Calgary in the last year than left in the past year. While the boost of 1,000 people was relatively low, it was still a reversal from last year, when the city reported an out-migration of 6,500 people.
“The bottom in the recession is behind us,” Tombe said.
Housing vacancies in Calgary continue to be concentrated in apartments following a surge in boom-time construction that flooded the market with new units when the recession hit.
According to the census, there were 10,600 vacant apartments in April, accounting for 45 per cent of all empty dwellings, followed by 5,000 vacant single-family homes.
Renters have been reaping the rewards of the glut, which has given them much more housing to choose from, while landlords have offered lower rates, rent holidays and other perks to attract tenants.
Bob Dhillon, chief executive of the western Canadian landlord Mainstreet Equities, said high rental vacancies have been driven in part by a drop of in-migration and an increase of tenants leaving their apartments to either live with friends or family, or to move out of the city.
A third factor, he said, was a spike in condo construction with many of the new units being converted to rentals.
Still, Dhillon believes the economy is on the rebound.
Mainstreet reported Thursday that its vacancy rate for properties it has owned for a year or longer was nearly 10 per cent in the last quarter, down from 12 per cent a year ago.
But its rental revenues per each apartment fell by five per cent, to $865, in the three months ending June 30, due to rental incentives, bad debts from tenants and acquisitions of properties with high vacancies.
Dhillon said rents in Alberta appeared to have hit a bottom, though he expects incentives, such as rent holidays, will likely continue for the rest of the year and perhaps into 2018.
The CEO believes an oversupply of rental apartments will eventually be taken off the market as Alberta’s economy adds more jobs and more people move to the city. He said an in-migration of people from other countries is good for his business, given that they typically rent.
“Every indicator is showing that things have bottomed and bounced off the bottom,” Dhillon said. “The challenge is, how long will it take to absorb the vacant units?”
– Calgary Herald