Vancouver, Edmonton and Calgary Rental Market Overview Christina Butchart, Regional Economist April 2018
Themes 2
Calgary
Employment growth has returned Employment, Calgary CMA employed (,000s) 900 850 Actual Seasonally Adjusted 800 750 700 650 600 550 500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Statistics Canada 4
Calgary CMA Employment by Industry Construction Business, building & other support services Accommodation and food services Wholesale and Retail Trade Manufacturing Mining, quarring, oil & gas, forestry, fishing Public Administration Utilities Finance, insurance, real estate and leasing Transportation and warehousing Educational services Information, culture and recreation Health care and social assistance Other Services Professional, scientific & technical services Source: Statistics Canada -15-10 -5 0 5 10 15 March yr/yr change in employment (,000s) 5
Unemployment remains above national average Unemployment rate, Calgary CMA and Canada seasonally adjusted unemployment rate (%) 12 Calgary Canada 10 8 6 4 2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Statistics Canada 6
Migration has declined number of people Net Migration, Calgary CMA 45,000 Non-permanent Residents Intraprovincial 35,000 International Interprovincial Net Migration 25,000 15,000 5,000-5,000-15,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Statistics Canada 7
Growth patterns are changing Population growth by age, Calgary CMA year/year change (%) 12 2017 10 2007-2016 Average 8 6 4 2 0-2 Source: Statistics Canada, CMHC calculations 8
The rental universe is growing Apartment rental universe, Calgary CMA rental units 40,000 35,000 Purpose-built Condo Apartment 30,000 25,000 20,000 15,000 10,000 5,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC, October Surveys 9
As the secondary rental market increases rental units 25,000 20,000 Condo apartment rental universe, Calgary CMA Condo Apartment 15,000 10,000 5,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC, October Surveys 10
And new rental units come to the market 2,500 2,000 Rental Apartments Starts, Calgary CMA Starts Completions 1,500 1,000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC
Vacancy rate will gradually decline Apartment Vacancy Rate, Calgary CMA vacancy rate 8% 7% 6% 5% 4% 3% 2% 1% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f Source: CMHC, CMHC Forecast (f), October Surveys 12
Calgary CMA Same-sample Average Rents percentage change of average two-bedroom apartment rent 1 8 6 4 2 0-2 -4-6 -8 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC, October Surveys 1 The percentage change of average rent is based on those structures that were common to the to the survey sample in both the current and previous year. 13
Edmonton
Job losses in the first three months of 2018 Employment, Edmonton CMA mo/mo seasonally adjusted employment growth (000s) 12 10 8 6 4 2 0-2 -4-6 -8-10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Statistics Canada
Employment to move higher in 2018 and 2019 employment (000s) 800 Employment, Edmonton CMA 750 700 650 600 550 500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f Source: Statistics Canada, CMHC Forecast (f)
Unemployment rate moves lower Unemployment Rate, Edmonton CMA seasonally adjusted unemployment rate (%) 9 8 7 6 5 4 3 2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Statistics Canada
Migration declines for a third consecutive year Net Migration, Edmonton CMA number of people 40,000 International Non-permanent residents Intraprovincial Interprovincial Total 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0-5,000-10,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Statistics Canada
Lower migration will slow the pace of population growth population (000s) 1,500 Population, Edmonton CMA 1,400 1,300 1,200 1,100 1,000 900 800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f Source: Statistics Canada, July to June, CMHC Forecast (f)
Rental construction has slowed 3,000 Rental Apartments Starts, Edmonton CMA 2,500 2,000 1,500 1,000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC
But the universe will continue to grow 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Rental Apartments Under Construction, Edmonton CMA Source: CMHC 21
Inventory of new rental units remains elevated 1,200 Unabsorbed Rental Apartments, Edmonton CMA 1,000 800 600 400 200 0 Source: CMHC 22
Vacancy rate is forecast to decline per cent Apartment Vacancy Rate, Edmonton CMA 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f Source: CMHC, October Survey, CMHC forecast (f)
Average rent continued to move down in 2018 Average Apartment Rent, Edmonton CMA average two-bedroom rent $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f 2019f Source: CMHC, CMHC Forecast (f), October Survey
Vancouver
BC is still one of Canada s top performers 4% 3% 2.9% Change in Employment (%), Mar 2017 Mar 2018 2% 1% 0% -1% -2% 1.9% 1.8% 1.8% 1.6% 1.6% 1.3% 0.7% 0.3% -0.4% -0.9% P.E.I AB QC BC ON Canada NS MB NB SK NL Source: Statistics Canada 26
Unemployment Rate Trending Downwards in Vancouver 9 8 7 6 5 4 3 2 1 0 Unemployment rate (%), Vancouver CMA Source: Statistics Canada 27
Immigration is the main contributor to household growth 50,000 Net Vancouver CMA Migration 40,000 30,000 20,000 10,000 0-10,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 International From other provinces To other BC areas Source: Statistics Canada 28
VANCOUVER CMA 5-year avg annual chg: 16,000 households/ year CITY OF VANCOUVER 5-year avg annual chg: 2,900 households/ year 29
Household growth is more concentrated in the rental market Net New Households, Vancouver CMA 2006-2011 2011-2016 32% 59% Renter Households Source: Statistics Canada, CMHC Calculations 30
Rising Ownership Prices Keeps More Households Renting $3,000 $2,500 $2,000 $63k $62k $67k $69k $70k $67k$70k $74k $78k $85k$103k Average Rent - Primary Average Rent - Rental Condominium $1,500 $1,000 $500 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Carrying Cost of Median Condominium Apartments (Strata) 20 per cent Down Payment - Median Condominium Apartments Note: Carrying cost includes mortgage payment, median condominium (strata) fees and median property taxes. Sources: CMHC, REBGV, FVREB. Internal calculations CANADA by CMHC MORTGAGE AND HOUSING CORPORATION 31
Share of income, % Years of savings First-time buyers have to save a lot to get into the market 300% Savings Expectations for First-Time Buyers of Detached Houses, Vancouver CMA 10 250% 200% 150% 100% 50% 0% 8 6 4 2 0 Years to Save for a Downpayment (25% Savings Rate) Share of Annual Income Needed for 20% Downpayment Sources: Stats Can Survey of Labor Dynamics; MLS data.
Share of income, % Years of savings First-time buyers have to save a lot to get into the market 300% Savings Expectations for First-Time Buyers of Detached Houses, Vancouver CMA 10 250% 200% 150% 100% 50% 0% 8 6 4 2 0 Years to Save for a Downpayment (25% Savings Rate) Share of Annual Income Needed for 20% Downpayment Sources: Stats Can Survey of Labor Dynamics; MLS data.
Tightening Rental Market in the Last 5 Years 34
Tightening Rental Market in the Last 5 Years 35
Tightening Rental Market in the Last 5 Years 36
Tightening Rental Market in the Last 5 Years 37
Tightening Rental Market in the Last 5 Years 38
Developers bringing more rental projects to the market Rental Apartment Starts and Completions, Vancouver CMA 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Starts Completions 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC 39
Vacancy rate remains low vacancy rate 3% Apartment Vacancy Rate, Vancouver CMA 2% 1% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC 40
The pace of rent growth has moved higher Same-sample average rents, Vancouver CMA percentage change of average apartment rent 1 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CMHC, October Surveys 1 The percentage change of average rent is based on those structures that were common to the to the survey sample in both the current and previous year. 41
Summary Stronger economies in Edmonton and Calgary are expected to push vacancy rate down Higher prices and low selection on the resale market will continue to support rental demand in Vancouver Rental construction across all three centres is increasing the size of the rental market 42
What is the Rental Construction Financing Initiative? More information cmhc.ca/financinginitiative Questions financinginitiative@cmhc.ca radamach@cmhc.ca $3.75B $1M minimum loan 4 Ye a r Initiative In low-cost loans to housing providers for the construction of standard rental apartments in Canada 43
CMHC Market Analysis and Housing Observer Online Recent report releases: Housing Market Assessment (Q1) Examining Escalating House Prices in Large CMAs (Q1) Upcoming releases: Housing Market Assessment (Q2) Seniors Housing Survey (Q2) 44
Thank You! Canada Mortgage and Housing Corporation www.cmhc.ca 45