Employment levels in the South Okanagan may be one element pushing Penticton’s apartment vacancy rates up, according to figures recently released from the Canada Mortgage Housing Corporation.
This week CMHC released its fall Rental Market Report, which listed Penticton’s percentage of vacant apartments edging up to 4.8 per cent in October 2011 from the same month last year that posted 4.4 per cent vacancies.
For a two-bedroom, privately owned apartment in the city, the vacancy rate jumped to 4.9 per cent from 3.3. Three-bedroom and more homes saw nearly a 10-percentage point jump, up to 16.7 per cent in 2011 from 7.6 per cent the year before. Bachelor suites were up to three per cent from 1.4.
The only category that saw a decline was one-bedroom apartments. Vacancy rates dipped in that segment by one per cent to 4.7.
Paul Fabri, CMHC’s market analyst for B.C.’s Interior, said that the Okanagan and Interior is seeing a fluctuation in terms of available housing. Kelowna’s vacancy rate is at three per cent, which is a drop from the 3.5 per cent posted at the same time in 2010. But most other communities saw an increase: Penticton, Vernon (8.5 per cent, up from seven), Salmon Arm (5.7 per cent, up from 4.7) and Kamloops (3.9 per cent, up from 3.5).
“We’re certainly not seeing employment growth at the levels we saw in the mid-2000s. That translates into less demand for rental housing,” Fabri said.
The provincial apartment vacancy rate decreased to 2.4 per cent from 2.7, and the average rent for a two-bedroom apartment in new and existing rental buildings is $1,050 per month.
“The vacancy rate for the province overall is influenced hugely by the Vancouver market because it’s such a large population and number of rental units there. That tends to influence the provincial number quite significantly,” Fabri said, adding rates went down in northern, resource-based communities like Fort St. John and Dawson Creek. “They’ve certainly benefitted from strong demand for commodities and higher commodity prices in the last year. That’s boosted employment in these areas, and that usually results in stronger demand for all types of housing, including rental housing.”
Okanagan communities also went through a condominium boom in the last decade, and many units have since been rented out.
“We saw quite a surge in condominium construction through the mid-2000s and a lot of that has ended up made available for rent, and that’s competing with the purpose-built rental housing,” Fabri said, adding this may be compounded with less demand. “We have seen some renters have taken advantage of the low mortgage interest rates, the big supply and selection of listings for sale, and prices have come down from where they were three years ago.”
Average rents for private apartments were also down across the board in Penticton. Bachelor suite renters paid an average of $534, down from $543. One-bedroom apartments cost an average of $649 per month, down from $663. Two- and three-bedroom apartments also saw average declines to $768 from $783 and $921 from $926, respectively.
Fabri added CMHC tries to compare existing buildings from year to year, as newer units that fetch higher rates can skew the results.
“When we compare rents from year to year, we have to try to compare apples to apples,” he said.
Penticton is in line with average Okanagan rental prices, Fabri added, in that prices have gone up in the last decade but have seen recent stabilization if not slight decreases.
“That’s happened as a result of the vacancies. It becomes more competitive and to attract more renters, managers will either have a smaller increase, hold the line or even allow rents to edge down,” he said.
Vacancy rates in Summerland are difficult to track because of limited information. The CMHC made notations on the table that indicate data for bachelor, one-bedroom and three-bedroom apartments was suppressed to protect confidentiality or because it was statistically unreliable. Two-bedroom vacancy rates were reported as being 14.3 per cent in 2010 and dipping to five per cent this year.