‘The market definitely has changed’: Calgary landlords see fortunes turn on a dime
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Calgary landlords are seeing a noticeable drop in the number of prospective tenants and some are opting to reduce their rents in response, as the city’s once red-hot housing market appears to have cooled substantially, according to industry representatives.
“People are telling me it’s taking longer to rent their units – they’re not getting as many calls now,” said Gerry Baxter, executive director of the Calgary Residential Rental Association. “It certainly appears at this time that the economic downturn is starting to now impact this industry.”
Baxter said the impact has been most pronounced in the past month or two, and he figures job losses in the oil-and-gas and related sectors are behind the change.
“Many people are telling me they’ve got people breaking their leases and moving out of the province,” Baxter said.
Bill Blake of the Alberta Landlords Association, which represents smaller “mom and pop” rental operations and provides active online forums where landlords discuss their issues, said his members started seeing things change as early as January.
“The market definitely has changed,” Blake said. “We’re just not getting nearly as many calls.”
He said things are particularly different compared to last year, when many landlords had their pick of prospective tenants and some were raising rents by 20 to 30 per cent year-over-year, leading Mayor Naheed Nenshi to admonish many for price “gouging.”
In response to the mayor’s comments last October, Blake told Metro that, while things were good for the industry at the time, things can change quite quickly and it was only five years earlier that many landlords were “struggling financially, themselves” in the wake of the last recession.
Now, he said, he’s seeing a similar situation emerge.
“A lot of tenants, their job prospects aren’t that great. We’re seeing a lot of people needing to break their lease,” Blake said. “A lot of newer landlords who just got into the market in the past five years when things have been really hot, they’re getting really stressed out.”
While Blake noted it’s not a perfect measure, the Canada Mortgage and Housing Corporation’s twice-annual reports on vacancy rates is often looked at as a measure of rental-market trends.
Last year, CMHC predicted a 1.6 per cent vacancy rate for Calgary in 2015, but Felicia Mutheardy, the group’s principal of market analysis for the city, told Metro in April the figure could actually be closer to 2.0 per cent, given “ some of the effects of the low oil prices on local housing markets.”
With the CMHC’s next report due out later in June, Baxter said he wouldn’t be surprised to see that figure jump even higher.
“Based on what I’m hearing, I think we might see more than two per cent, because it seems the market is taking a bit of a hit,” he said.