By: Penelope Graham, Zoocasa
It has been a tough few years for the Albertan economy; the oil industry downturn has depressed growth, leading to wide-scale layoffs and slashing migration to the province. While this has created financial hardship for many – and put the squeeze on Edmonton and Calgary real estate markets – landlords are also bearing the brunt.
These economic factors have led to the slowest rental market since 1988, according to the 2016 rental market data released by the Canada Mortgage and Housing Corporation (CMHC). Vacancies in the province are up to a whopping 8.1%, an increase of 5.6% since last year. To put that into perspective, rental vacancies are just 0.6% in Vancouver, and 1.7% in Toronto.
Albertan rents have also dropped by 5.1%, to an average of $1,100 per month.
Oil Cities Hardest Hit
The hardest hit regions are those with close oil ties; Cold Lake tenants dropped a drastic 26.2% compared to 2016, as out-of-work industry employees left the area. The Edmonton housing market has also suffered, with a vacancy rate of 7.1%, up from 4.2% last year – that’s the biggest jump in 20 years, reports the CMHC. Calgary follows with a 7% vacancy rate. Sought-after mountain destinations like Canmore, however, continue to be competitive, at 1.4%.
“Provincial vacancy rates rise for a second consecutive year, as rental supply outpaces demand,” stated Lai Sing Louie, CMHC’s regional economist for Prairies and Territories.
Tenants are also living in their rentals for shorter periods of time, with a big hike experienced in turnover last year, at a rate of 37.1% across the province in 2015, compared to the national average of 20%. That nearly doubled to a rate of 51.8% in Cold Lake, and lowest in Canmore at 14.1%.
Tips for Student Tenants
While that’s disheartening news for landlords and those affected by oil’s downturn, a silver lining lies in more affordable housing options for students, as Calgary and Edmonton are officially renters’ markets. According to the CMHC, you can now expect to pay these average rents, depending on unit size:
Primary Rental Market by Bedroom Type
# Bedrooms Vacancy Rate Average Rent
Bachelor 7% $838
1 Bedroom 7.40% $1,003
2 Bedrooms 8.80% $1,195
3+ Bedrooms 9.10% $1,307
The biggest slowdowns are being seen for larger units with multiple bedrooms, offering an affordable opportunity for students to split rents – good news, as university residence units are slated to rise. It’s also a great chance to negotiate with your landlord on rent reductions, utilities and other perks. In fact, reports the Globe and Mail, Boardwalk Real Estate Trust – a Canadian real estate rental giant – has invested roughly $7 million in incentives in order to appeal to renters.
The bottom line for student renters: Understand current market rates – and your negotiating power – during Alberta’s renters’ market.