Housing costs down, rents up
Buying a house reaches new low, but rents expected to increase this year
Jessica Davey-Quantick
Northern News Services
Wednesday, September 14, 2016
SOMBA K'E/YELLOWKNIFE
It's a good time to buy a house in Yellowknife, with prices expected to drop by around $32,000 on the average home in 2016, according to the Canadian Mortgage and Housing Corporation (CMHC).
The summer real estate market was good news for buyers, with more availability and a drop in prices this year. - NNSL file photo |
But renters shouldn't expect a break. Despite more expected availability, rents are forecast to continue to rise.
"It was a more balanced market than we've seen in quite a while, at least a decade," said Adrian Bell, agent of record at Century 21 Prospect Realty.
Residential sales increased in the first quarter of 2016 by 63 per cent, and are expected to range between 395 and 405 sales this year, according to the CMHC.
That means there are more properties for sale on the market, many the result of new construction. According to the CMHC, construction of new, multiple-unit dwellings like apartments continues to rise at the same level as last year, with between 55 and 65 new builds expected to break ground in 2016, with similar numbers for construction of single-family detached units.
"In years past there were very few listings on the market, very little new development, and so it was a little bit difficult if you're looking to buy something and there's nothing to look at," said Rod Stirling, president of the Yellowknife Real Estate Board.
He said many of these new developments, particularly condos, are already sold out, with some ranging between 50 and 80 per cent pre-sold.
Which might be good for buyers, but Stirling said it's not the best news for those trying to sell, who in past years could expect their property to sell quickly and, thanks to multiple offers, above the asking price.
The annual residential sale price in 2015 was $417,049, up just one per cent from the year before. But as of the first quarter of 2016, the average price had declined by 24 per cent and the sale price is expected to range this year from $384, 900 to $390,100. This was driven, according to the Canadian Mortgage and Housing Corporation, by fewer sales in the upper end of the price range, with sales focusing on lower-priced housing options.
Buying a more reasonably priced home or apartment is an option in an environment where rentals are expensive and hard to come by. The vacancy rate for purpose-built apartments in October 2015, according to CMHC, was 1.9 per cent. The vacancy rate for rentals is expected to rise to three per cent in 2016. But rents are also on the climb: in October 2015, the average two-bedroom, purpose-built apartment in Yellowknife rented for $1,700, up from $1,686 in 2014.
The increase of options will slow down rent increases, but it won't stop them - the CMHC expects rents to continue to rise in 2016, up to $1,710. But that's just a starting point: the CMHC report indicates part of what's driving the increased rise is the availability of newer units. While $1,710 is the baseline average, the number opens up speculation that units with more amenities or renovated units can be rented for more.
According to Stirling, a "normal" vacancy rate should be around four per cent, a number most Yellowknife renters can only dream of.
Mackenzie Management, for instance, told Yellowknifer at press time they had zero vacancies. Triton Property Management had about five.
As for rents, according to a Triton representative who preferred not to be named, they're "high enough" but could increase for certain kinds of properties, especially renovated units. The number of units available through Polar Developments Ltd. was unavailable at press time but a representative said he'd be surprised if it was more than just one or two.
"I think that people will always move into well kept nicer, high-end properties," said Stirling.
Which means, he says, that lower-end properties have some sprucing up to do to compete in a market where renters aren't on waiting lists to get an apartment, any apartment.
However, neither Bell nor Stirling see the Yellowknife market as an overheated real-estate bubble doomed for disaster, like Vancouver or Toronto, which spurred new statistics from the Bloomberg Nanos Canadian Confidence Index that say 20.5 per cent of Canadians expect the real-estate bubble to burst in the next few months.
"This is not Vancouver or Toronto. And it's also not Calgary. We're not experiencing a downturn like they are relating to oil and gas prices," said Bell.
He says Yellowknife is "very much like" the rest of the country outside those larger centres.
Despite the high rents and still relatively high cost of buying a new property, Bell said the lively real-estate market this quarter is actually a sign that things are on the upswing.
"We're not just seeing a whole bunch of listings sitting on the markets with nobody buying. That would be a warning to people that there's poor investor confidence consumer confidence in the market," said Bell. "But what we're seeing is people are continuing to buy, so it says to me that people are pretty happy with the state of affairs right now. I think it's just a good market for buyers and sellers."
