Vacancy spike in Calgary forces landlords to offer incentives
'People have to react to that and adjust their prices'
Income properties used to be a pretty safe investment for many Calgarians, but the city's rising vacancy rate is making some landlords nervous.
Ryan Kostel, who manages several rental properties in the city, says the energy sector downturn has changed the market.
His parents invested in rental properties years ago, and they never had a problem finding tenants — until now.
"I mean, I've only been helping out for the last few years but still, this is the first time it's never been a sure-fire," he said.
Cody Krause, a market analyst with the Canada Mortgage and Housing Corporation (CMHC), says its analysts base rental research on a younger demographic. And the data reveals that, as more young people leave Calgary to find work, demand for rentals is dropping.
"If you look at the most recent civic census, we're going from 2015 positive migration, to actually an outflow, negative net migration in 2016."
Mark Hawkins, president of Rentfaster.ca, says landlords need to reflect the economy in their rates.
"Because the market is very different than it was a year, what it was two years ago, the economy is way different here, so people have to react to that and adjust their prices," he said.
In addition to dropping rental rates, landlords should also consider other incentives, he added.
"Being flexible on some other terms, like an early move-in date or not a year's lease, maybe an eight-month lease, can be more important to the renter than a reduction of the rental rate."
Calgary's vacancy rate is expected to reach seven per cent by next month, according to CMHC.
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