RHB (Rental Housing Business) magazine recently reported that owning a home in Calgary is becoming more difficult to attain, however, the rental market is hot.The vacancy rate in Calgary rental market declined from 6.3% in 2017 to 3.9% last year.
James Cuddy, a senior analyst with the Canada Mortgage and Housing Corporation states “The way this is connected to the rental market is a function of these affordability challenges we’re seeing in the market and given the pressures put on an individual’s affordability – and we know interest rates are higher—they are renting longer”.
Interprovincial migration is another reason for the resiliency of this rental market through the first three quarters of 2018. A complete contrast to the previous 2.5 years of negative growth.
Cuddy also attributes the steady growth of international migration which is contributing to higher demand for rentals in Calgary.
Cuddy believes that the economic recovery which has been slow, the fact the unemployment rates remain high and a lack of personal growth in disposable income has affected the ability to move on to homeownership, therefore urging people to look into more reasonably priced options.
John Hripko, a sales agent with Royal LePage Benchmark, states that the “B-20 mortgage stress test has ravaged homeownership prospects for many would-be-purchasers”.
This prevented many people from meeting the criteria to qualify for a mortgage. Hripko believes that “these rules are realistic from a standpoint of preventing people from being over their heads. It’s short-term pain for long-term gain”.
Although B-20 removed many buyers from the market, it may have impacted the debt levels.
Bank of Canada indebted borrowers had decreased after this implementation, however, Cuddy states “the caveat is it’s difficult to attribute these trends to the stress test because of other things going on, particularly interest rates, which could be – Canada-wide –contributing to the decline of highly indebted borrowers.”