Red Deer’s tight residential rental market gained a little slack during the past year, according to a report issued Thursday by Canada Mortgage and Housing Corp. However, average rents continued to climb.
CMHC’s latest rental market report, which was based on a survey conducted at the beginning of October, calculated Red Deer’s average vacancy rate at 1.9 per cent. That compared with 1.2 per cent in October 2012.
The survey found the average monthly rent in the city was $876, as compared with $804 a year earlier.
Red Deer was the only one of Alberta’s seven largest urban centres to post a year-over-year decline in its average vacancy rate. Felicia Mutheardy, a market analyst with CMHC, said there were a couple of explanations for this.
One was the addition of new rental units in the city. In October 2012 there were 4,470 apartments in Red Deer, a figure that had grown to 4,560 this fall.
Also nudging up the vacancy rate has been the strong local economy, said Mutheardy, with people leaving rental accommodation as they’re able to buy homes.
“We’re seeing very strong sales in the resale market, as well as very strong for new home production.”
Mutheardy isn’t surprised that Red Deer rents have continued to rise.
“A 1.9 per cent vacancy rate is still quite low,” she said, adding that the addition of new apartments could be a factor as well. “When you’re looking at units that are coming onto the market — units for newer buildings — they typically tend to ask for higher rents.”
It appears that Red Deer’s inventory of rental accommodation will continue to rise. Seymour Pacific Developments Ltd. is building a 79-unit apartment building in Lancaster East, and Laebon Developments Ltd. is adding a 73-unit building to its Timberstone Village complex.
Laebon president Gord Bontje said the second of the two existing buildings at Timberstone Village came on to the market in late October.
“We advertised it in early September and I think on the day it was completed, about 60 of the 67 units had been rented.”
The remaining suites were scooped up within a few weeks, he added. This level of interest set the stage for work to begin on the third apartment building, which is expected to be ready for tenants by late August.
“Our experience was that there was a reasonably good demand for the building that we brought on in October, and certainly gave us the confidence to proceed with the next one.”
The CMHC survey found that the vacancy rate for bachelor units in Red Deer in October was 2.2 per cent, up from 0.9 per cent 12 months earlier. In the case of one-bedroom apartments the rate was two per cent, up from 0.9 per cent; for two-bedroom suites the vacancy rate was 1.7 per cent, as compared with 1.5 per cent; and three-bedroom apartments had a 1.1 per cent vacancy rate, down from 1.5 per cent a year earlier.
The average rent for bachelor suites in October was $611, an increase from $568 the previous year. One-bedroom rents jumped to $796 from $736, the cost for two-bedroom units increased to $937 from $867, and rents for three-bedroom apartments were up to $1,057, from $961.
The CMHC survey, which is conducted every October and April, also looked at the rental markets in Lacombe and Sylvan Lake.
The average vacancy rate for two-bedroom apartments in Lacombe fell to 0.6 per cent from 3.4 per cent, while in Sylvan Lake it increased to 5.6 per cent from 1.4 per cent. Meanwhile, the average two-bedroom rent in Lacombe in October was $786, up from $784 a year earlier; while the figure for Sylvan Lake was $908, up from $747.
hrichards@www.reddeeradvocate.com