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View Full Version : Vacancy rate to hit 30-year low.. at 0.7%, even lower in '08



DebraW
15-05-2007, 11:38 AM
Vacancy rate to hit 30-year low
October’s rate forecast at 0.7%, even lower in 2008

Ron Chalmers, edmontonjournal.com
Published: Tuesday, May 15, 2007

Edmonton-area apartment vacancies will drop to a 30-year low of 0.7 per cent in October.

Then they'll go lower.

"Strong demand from newcomers and a shortage of new units entering the market" will reduce vacancy rates to 0.5 per cent in 2008, says a forecast released today by Canada Mortgage and Housing Corporation.

"The average rent for a two-bedroom unit will increase from $808 per month in October, 2006, to $970 in October, 2007," the national housing agency predicted. "Further gains will push the average two-bedroom rent to $1,115 in October, 2008."

Richard Goatcher, CMHC's senior market analyst for Edmonton, predicted that "total housing starts will moderate slightly this year in greater Edmonton to 14,150 units but will still represent the third highest year on record."

Unfortunately for renters, the great majority of new construction will be of single-family homes or condominiums that mainly will sell to owner occupants.

The balance is shifting toward condos because of high costs, an inventory of unsold single-family homes, and a shortage of building lots.

Multiple unit starts, mostly condos, will reach the highest level since 1982, with 6,000 units in 2007 and close to 5,500 in 2008.

Goatcher traced the continued brisk construction activity to regional economic strength, in-migration and stable mortgage rates.

Sales of resale homes, which hit a record number of 21,984 units in 2006, will rise even higher in 2007 with the growth of new listings, CMHC predicted. Sale are expected to fall slightly in 2008 as high prices will deter first-time buyers.

CMHC forecasts that full-year average prices, for all forms of resale housing, will rise from $251,000 in 2006 to $340,000 in 2007 and $374,000 in 2008. But that forecast may already be outdated, as the Edmonton Real Estate Board has reported that prices averaged $344,137 in April.

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Brentk
15-05-2007, 11:50 AM
All I can say is we need more help... in getting these houses built! These are not ordinary times. We are essentially building new cities out west (Edmonton and Calgary) and they are going up faster than anything we have seen before in Canada.

DebraW
15-05-2007, 11:52 AM
Yes, I could not agree more!

These are unprecedented times and we need creative thinking to come up with SOLUTIONS!

Sonic Death Monkey
15-05-2007, 12:22 PM
Yeah, damn those rent controls for prohibiting the building of new apartments right now. :?

DebraW
15-05-2007, 03:31 PM
Condo conversions deplete apartment supply

Duncan Thorne, edmontonjournal.com
Published: Sunday, March 4, 2007

Barbara Hagensen remembers scrambling to find an apartment when she arrived in Edmonton during the boom of the early 1980s.

More than 25 years later, the city and province are booming again. But her 1981 search was a cakewalk compared to the task she may now face -- finding a new, affordable apartment in a city that has fewer places to rent now than it did 20 years ago.

According to statistics gathered by Canada Mortgage and Housing Corp. (CMHC), there were about 79,600 rental units in the region in 1987. Last year, there were 5,050 fewer, a drop of 6.3 per cent. Most of the original units were turned into condos.

The company that owns Hagensen's current apartment, one of 504 units in Strathearn Heights Apartments, just outside downtown, has given notice it plans to tear the complex down and put up condos.

"I am really concerned about my neighbours who are on fixed income," Hagensen says.

The problem is unlikely to get better any time soon.

"Throughout most of the past 20 years the (rental) universe has been declining because of condo conversions," says Richard Goatcher, senior market analyst at CMHC. "What we've seen is that around 1,000 units a year have been leaving the universe to become condominium properties over the last couple of years."

Between 1987 and 2006, the region's population soared by almost 233,000, or 29 per cent, to more than a million people. That obviously boosts demand for rentals.

There is a little apartment construction to make up for those lost to conversion. Last year, for instance, work began on about 270 units.

Overwhelmingly, developers concentrate on building condos. They built more than 5,600 units in 2006.

"Our rental inventory has just gone downhill," says Clarence Rusnell, past president of the Edmonton Apartment Association.

The city has earmarked $25 million over five years, under its Cornerstones program, to help developers provide 2,500 affordable units. That's 500 units a year -- not enough to make up for conversions to condos, officials say.

Coun. Michael Phair, who handles council's housing responsibilities, says the city can do nothing to stem the conversion flood.

Provincial law entitles building owners to convert.

The city provided incentives for new housing downtown in the late 1990s so more people would live there. Phair says he and others on council expected most of the units would be rentals.

"What has happened to many apartment buildings in the downtown is they've become condos, or they were built as condos," Phair says.

Across the city, apartment towers and townhouses were the first rental units to be converted to condos. These days, the owners of humbler walk-ups are dressing up their apartments for the condo market.

Near Old Strathcona, apartments that have long been popular with university students are for sale.

Typical of the trend in the area, a one-bedroom basement suite was recently for sale at $169,900. The owner of a "cosy" one-bedroom within walking distance of Old Strathcona has been asking $177,900.

An up-market, one-bedroom in Garneau has been available for $485,900.

City-wide, the Edmonton Real Estate Board reports that the average condo price in January was $233,175, up 74 per cent in 12 months.

At CMHC, Goatcher says the rental supply is shrinking even though some condo buyers are investors who then rent their suites.

The agency is getting reports of some condo owners boosting rents by up to 50 per cent, to cover the soaring cost of buying the units, he says.

"The cost of a 1,000-square-foot, new, two-bedroom condominium concrete highrise is rapidly moving towards $500,000 in this city," Goatcher says. "That's Vancouver prices."

CMHC started the year by predicting rent increases of 10 to 15 per cent. Goatcher says January increases have prompted it to raise the forecast for the year to 20 per cent.

Monthly rents averaged $727 last year, according to CMHC. The average for a two-bedroom was $808.

Jim Gurnett, executive director of the Edmonton Mennonite Centre for Newcomers, says few apartments in that price range are available to would-be renters.

"If you don't have $1,000 a month to spend on rent, there's really nothing in this town. Our staff cannot find places for people to live."

Even $1,000 a month is too low to encourage apartment construction, the apartment association's Rusnell says.

Costs are such that a developer would have to charge about $1,700 a month to build an apartment of the quality renting for less than $900, he says.

David Kent, president of Nearctic, the developer of the condo plan for Strath-earn Heights, where Hagensen lives, contends council triggered the condo conversion phenomenon in the 1980s. It set property taxes significantly higher on apartments than on individually owned units.

Many apartment landlords changed to a condo ownership structure back then, although they did not sell the units immediately, Kent says.

Rev. Christopher New, pastor of the Edmonton Moravian Church in Old Strathcona, says developers and tenants often have a different sense of affordability. New, who is also a leader of the Greater Edmonton Alliance, offers a glimmer of hope that there's a way of reaching an acceptable compromise.

The church-based GEA works to get both sides talking. In his experience, developers are open to changing plans in ways that work for tenants.

Talking worked at Ascott Garden, an apartment complex in north-side Athlone that is to be replaced by condos. GEA's intervention led to the

developer, Lambridge Capital Partners, linking up with Capital Region Housing to provide a home-ownership program for low-income tenants.

New hopes GEA can help tenants and Nearctic resolve concerns at the Strathearn project. The signs are promising.

Nearctic president Kent says the project will happen in phases over five to eight years, a period in which most tenants would normally leave. He promises that when existing apartments are torn down he will move longer-term tenants, such as Hagensen, at company expense into apartments other tenants vacate.

Eventually they'll have first dibs on 88 affordable places among the project's proposed 1,750 units, Kent says.

"We're hoping that some of those affordable-housing units are rental units."

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© Edmonton Journal 2007

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DebraW
16-05-2007, 08:28 AM
Homes lottery proposed
Use of school sites will help keep costs low

Darcy Henton, The Edmonton Journal
Published: Wednesday, May 16, 2007

City officials expect such a clamour for lower-cost homes being built on surplus school sites that they're planning a lottery to determine who gets to buy them.

City housing manager Terry Loat said Tuesday his department is already getting calls for the 80 or so townhouses that will be available for first-time home buyers to purchase in 2008.

"We generally have a demand that exceeds the supply," he said. "We've had numerous calls from folks that say: 'This sounds like a wonderful opportunity for my family. Can I register my interest at this point?' We're saying: 'Not quite yet, but don't lose interest.'

Loat said the pilot program to develop starter homes on surplus school property in mature neighbourhoods isn't the panacea to resolve the housing crisis, but it is a good start. "This is targeting one specific area -- people who can't buy their own home. It's a piece of the grand puzzle."

The project, touted by Mayor Stephen Mandel as one way to tackle rising housing costs, initially met resistance in some neighbourhoods from residents who feared an influx of social housing and the loss of green space they were using as parkland. When the province expedited the rezoning process last fall to allow 20 surplus school sites to be used for housing, some residents complained the program was being rammed down their throats.

Russ Dahms, executive director of the Edmonton Federation of Community Leagues, said the lack of consultation was upsetting.

He said the federation advised the city to do a better job of consulting on the pilot projects "because people are not happy."

"Nobody liked the way they just came in and did it as a done deal," said Angie Eleniak, whose community in northeast Edmonton was the first to be selected for the pilot program. "Nobody was appreciative of that process."

But since the mayor and ward councillors provided details of the pilot program at a community meeting last week, residents are more receptive to the idea, said Eleniak, who is president of the Homesteader Community League. "Now everybody is saying: 'OK, we see how it can benefit the area.' "

Eleniak said the biggest hurdle to overcome was the belief that it was a social housing program.

She said residents have been assured the townhouses that will be constructed on the Canon Ridge school site will be purchased by middle-income families. No rental units are being constructed.

"They are aimed at middle-income families that are just starting out and can't afford a half-a-million-dollar house," she said.

Mandel has said the program will target young families or couples with incomes of $60,000 to $80,000.

Loat said the houses will be more affordable because the home buyer will only need to qualify initially for a mortgage for the house. The city will hold the mortgage on the land for the first five years.

After five years the home buyer will be required to pay for the land at the price at which it was appraised at the time of construction -- either from savings or through a second mortgage, he said.

Revenue from the sale of the land will be shared with the school boards, but they'll have to wait five years to get it, he said.

The Greenview school site in Mill Woods is the second site being considered for townhouse starter homes and more public meetings are planned for that community, Loat said.

Eleniak said residents in her community have been invited to sit on an advisory panel with the architect and builder to provide input into the design of the project.

"We're definitely being invited to be part of the process," she said. "They're giving us the opportunity to take the lead on it."

She said ground-breaking could begin as early as this fall.

Loat said he hopes the two pilot projects of 40 to 45 starter homes each will convince other communities to embrace the concept.

"We're very confident that when these two projects are built they will be added seamlessly into the neighbourhoods," he said.

The city has suggested the program could create as many as 1,000 new housing units for first-time home buyers.

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