This time last year the Central Okanagan made national headlines for having one of the tightest rental markets in all of Canada. At that time, the Canadian Mortgage and Housing Corporation (CMHC) had just released the results of their annual October rental market survey which estimated the Central Okanagan vacancy rate (the % of purposed built rental units that were available for rent at the time) to be 0.4%! This meant that CMHC could only find ~20 purposed built rental units available for rent within the cities of West Kelowna and Kelowna, and the district of Lake Country.
That was dismal, and defiantly news worthy. But what a difference one year can make!
Flash forward, and slightly backwards, to yesterday when CMHC released their latest rental market statistics and the story changes. In just 12 months the Central Okanagan’s vacancy rate rose to 1.8%, and did so against a 500 unit increase in the area’s overall level of purposed built rental inventories.
While a 1.8% vacancy rate is still low by historic standards (steady-state vacancy rates range 2 to 3%), it is still a relieving statistic for those hoping to arrange a new rental situation within the Central Okanagan in the coming year. Moreover, ~1,700 new purposed built rental units remain under construction across the Okanagan today – most with completion dates scheduled in 2019. So looking ahead, Okanagan vacancy rate’s should continue to rise.
In general, rental market conditions that continue to balance between landlords and tenants leave little room for landlords to increase rents, and so rental rates should remain relatively stable in 2019 – juxtaposed the incredible jumps that rents took across the Okanagan in 2018. That being said, Knew’s Company Director, Sam Richards, points out that current market conditions, as just measured by CMHC, still varied widely when compared against a rental units construction age, and/or it’s location within the Okanagan (as tabled below).
“Looking closely at the most recent numbers, it’s worth noting that demands for newer products, or those built after the year 2000, are far stronger than those built in the year prior to 1980. This is causing areas where a lot of older inventory exists to experience much higher rates of apartment rental vacancy. The north and south central areas of the city of Kelowna are a good examples of this. As 2019 will be a year characterized by shifting market dynamics, it will be more important for those on the supply side of the areas rental market to pay closer attention to these type of details when making decisions regarding a rental renewal or rate change.”
Sam went on to talk about the rental market conditions tool Knew developed for their clients back in June 2018.
“Since last June, Knew has tracked granular trends in number of local online rental listings marketing across the Okanagan, and this had made us previously aware of the softening market conditions that have been occurring to-date. That said, it’s nice to see CMHC data reconfirm the information that we’ve been sharing with our clients for months now.”
The Knew Realty Research Rental Market Conditions Tool for the Central Okanagan is a monthly subscription report that tracks and summarizes all local properties advertising vacancies online each month. Knew’s clients use this report to make inference on future market conditions and the future direction of asking rents for differing residential products. To learn more about this product, or to place an order visit http://knewrealtyresearch.com/subscriptions/.