Many Red Deerians are paying 25 per cent more rent than last year — and finding little choice of accommodation as the local vacancy rate plunges to near zero, compared to 6 per cent in 2021.
Often 10 to 15 people are vying for one vacant apartment — and most of these prospective tenants will have steady jobs and references, so “a lot of good applicants will be disappointed,” admitted one local property manager.
The situation was the exact opposite in 2016, when some Red Deer landlords were so desperate for renters after the price of oil crashed that they offered a month of free rent. The vacancy rate then was about 15 per cent.
Now there aren’t enough apartments or row houses to meet rising demand. Last October, The Canadian Mortgage and Housing Corporation reported Red Deer’s vacancy rate to be 2.8 per cent — and it has been steadily dropping ever since.
Local property owner/manager David Kennedy confirmed on Tuesday that he has “near zero” vacancies in his 20 units. According to Hearthstone Property Management Inc. in Red Deer, only five of the 800 properties the company oversees in the Red Deer area are open for new tenants.
This week, a desperate mother of two young daughters posted a plea for housing help on social media. After two months of looking for rental accommodations, “I’m not being (picky),” said the woman, who has a 14-year-old and nine-years old. “I’m hoping for a two to three-bedroom place…. We have no pets.”
Similarly, an employed service electrician in Red Deer also asked for leads on accommodations on Red Deer Buy and Sell Everything, saying “I’ve been facing a lot of rejection from landlords and property management companies…. I am just looking for a one-bedroom… I make a clean living and treat all places I live very well. The rental market is just insane right now….”
Kennedy admitted it’s hard to know what to advise when people can’t get apartments even though they have a job and references — usually the prime qualifiers. He suggested it could just be a matter of being in the right place at the right time.
Red Deer native Michael Salomons, associate vice-president of real estate and finance for Colliers Canada, commercial real estate in Calgary, believes Red Deer’s vacancies have been steadily falling because more people are now moving to Alberta, largely for affordability reasons, to escape sky-high living costs in B.C. and Southern Ontario.
Instead of buying homes, many people are also staying in the rental market longer because of rising mortgage rates. Salomons believes this could also be curbing investment in new apartment projects in Red Deer — however, his company is looking to connect investors with various inventive programs offered through the CMHC (Canadian Mortgage and Housing Corporation).
Since virtually no new rental units have been built in Red Deer over the last six to eight years, city rents have increased substantially. According to rentals.ca, the average rent in Red Deer for a one-bedroom unit last month was $1,151 — an increase of 25 per cent from last year. The average for a two-bedroom unit is 1,334, a rise of nearly 20 per cent from 2022.
But these increases shouldn’t just to chalked up to property owners making higher profits.
A local property manager noted that anyone who’s had to remortgage a property over the last year is likely paying up to five per cent more in interest and would pass some of those costs on. Their renters are understandably upset to see their rental costs going up by $200 a month, in some cases.
This situation means that both property owners and renters are having to pay more when neither is really getting anymore for their money, said the manager. “It’s frustrating.”