Suppressed home sales roil Calgary rental market

Shamon Kureshi of Hope Street Management Corporation in a penthouse apartment his company manages in Calgary on March 21, 2022.Sarah B Groot/The Balloon and the Mail

Seven years after the economic recession that dwarf house prices in Calgary, the real estate market is finally showing signs of Recovery. But while a surge in pent-up supply brings much-needed listings to the resale market, rental properties outside of the city center are becoming harder to find, leading some Calgary renters to consider buying. a house.

In February, Katie Gielen received an eviction notice from her landlord as she was selling the one-bedroom condo she had rented since 2017 in Victoria Park, a neighborhood located just southeast of downtown Calgary.

Initially, Ms. Gielen was concerned about the availability of affordable rental units in a central location, as despite an increased number of rental properties, rental rates in this area also tend to be higher than Calgary average. “I have a disability, so I have a limited income,” she says. And since the last time I looked [for a rental] About five years ago, rental prices have gone up.”

Indeed, despite a increased variety of rental options, finding a suitable rental in Calgary’s hot real estate market is no easy task. Since August of last year, the number of vacant rental units citywide has steadily declined, while rental rates in February were about 10 percent higher than last year, according to data by Rentfaster. And conditions are especially tough for Calgarians who, like Ms. Gielen, have lower incomes, according to a recent CMHC. report shows

Some of the loss of rental units in Calgary can be attributed to “accidental” landlords putting their properties back on the market, says Shamon Kureshi, president and CEO of Hope Street, a property management company based in California. Calgary.

“Unfortunately, for the last 10 years in Alberta, the market hasn’t been very favorable for sellers,” says Mr. Kureshi. “So renting is a great way to help [homeowners] cover the monthly expenses that are attached to that house.” But now that the market is recovering, he notes, “we’ve lost a lot of rental inventory because owners are selling.”

On March 1, the Calgary Real Estate Board (CREB) reported a total residential reference price of $499,400, which is more than 20 percent higher than at the start of the pandemic, and the highest since 2014. In February, CREB also posted a record number of sales, fueled by an increase in new listings. Some of these new listings would presumably have been from repressed sellers with properties in the secondary rental market.

“Our inventory of available [rental] listings is very low, perhaps the lowest in several years,” says Mr. Kureshi. “And the properties that fit into the high-demand categories, properties that aren’t in the city center, typically rent the same day we list them.”

According to Matthew Boukall, Vice President of Product Management at Altus Group, “The interaction between the secondary rental market and the resale market is a reflection of economics.” And as economic growth in Alberta shows positive signs, the housing market in Calgary is on the upswing.

“Appreciation is driving decision-making,” says Mr. Boukall, noting that for homeowners whose properties have appreciated in value and are looking to exit the rental market, “now would be a good time to sell as prices are low.” on the resale market. .” However, he adds, a tighter rental market is also an opportunity for remaining homeowners. “The market is quite receptive, so if rents go up, we’ll see more supply coming in.”

But what’s good news for homeowners and investors is not ideal for renters worried about their prospects in a tight market. In mid-February, Mary Nelson and her husband (whose names have been changed for fear of jeopardizing their current lease) learned of their landlady’s intention to sell the 1950s bungalow whose main floor they had been leasing since 2020. The property had already been listed last summer, but after 90 days on the market, the listing was withdrawn and the landlady urged the Nelsons to extend the lease for another year.

“He was really pushing us to re-sign for another year,” recalls Ms. Nelson, noting that this made her and her husband feel confident that the property would not re-list until the end of its term. lease in the summer of 2022. But his landlady changed her mind, and this time the 1950s bungalow sold within a week.

“Once the house was conditionally sold, that’s when we panicked,” says Ms. Nelson, as under Alberta’s Tenancy Law, tenants have 90 days to vacate a property with prior notice. “The diference of the last year, [when the house didn’t sell] we actually had to figure out what we were going to do.”

Due to the cyclical nature of the Calgary market, this is a time when buyers, sellers and renters have to make quick decisions, says Mr. Boukall. “People who didn’t want to make a decision will be forced to; and people who have been waiting to make a decision, because the market has been slower, they can go out and make one.”

And faced with their unexpected eviction, the Nelsons are considering their options.

As the cost differential between rent and ownership widens, the Nelsons are now considering homeownership. “The rental market is such that it can be really challenging [to] find a place that really works for you,” says Ms. Nelson. “And then we realized that with all our savings, we could buy a townhouse or a condo.”

While there isn’t necessarily a correlation between evictions and homeownership, Mr. Boukall notes, “more housing decisions will have to be made, given the strength of the market.”

But not all renters have a choice.

“I can’t afford to buy my own place, so I’m at the mercy of the [rental] market,” says Ms. Gielen. Although she qualified for a subsidized unit in a purpose-built rental in Montgomery, this northwest neighborhood was not her first choice. “I was looking at Bankview, Crescent Heights, Mission,” she says. “But [for] the amount I could afford, I looked for places that weren’t very good.”

His new place, however, offers something that Calgary’s secondary-market rentals don’t: long-term stability. “I specifically went with a larger company so this wouldn’t happen again,” Ms. Gielen says of the landlord who sold the unit she rented. “I hope I can stay there for a long time.”

According to Mr. Boukall, the challenge with the cyclicality of the Calgary market is that it prevents property owners from selling when they want for the price they want. “So when these opportunities come along, people will just take advantage of the fact that there’s a lot of demand for Calgary real estate right now.”

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