Not your mother’s rental market
Earlier this week I received an email from a reporter saying he had heard about the slowing rental market and asking if he could interview me about that. At first I thought about declining because I really didn’t have much to say about the topic. Yes, after a couple years of near-zero vacancy rates, the rental market is easing, vacancy rates are increasing, and the pressure on rents will decline.
That pattern of a few years of tight rental market followed by a few years of more relaxed conditions has been going on for decades and is not really newsworthy to me.
But is it the same old? Are we going to return back to that 3% to 4% vacancy rate in an orderly fashion again this time? Well after some rummaging around the StatsCan website, I found some new to me data sets that contain construction starts by intended market type: rental, condo, or home owner (non-strata).
Everyone knows we have a lot of construction going on in the area, and we know that there’s more rental construction than we’ve seen for years, but seeing the data really put the magnitude of what’s happening into perspective for me.
For the 25 years after 1990, we averaged to break ground on only 200 new rental units per year. If the data went back further we would likely have similarly anemic rental construction back to the 60s. Then in 2015 rental construction suddenly took off and last year we were on pace for nearly 2000 new rental units or a 10x increase in rental construction.
A lot of this rental construction will hit the market this year and next with a number of projects getting occupancy this spring. If we have swung between 0.5% and 4% rental vacancy while building 200 units per year, what will be the impact on vacancy when we build 2000? With rents having jumped nearly 10% last year that new supply can’t come soon enough. The data on rents vs vacancy also shows how useless it is try and combat rising rents by reducing the cap on rent increases like the province recently did. You can’t fight basic economics, and the only way to prevent runaway rents is to increase the vacancy rate by adding supply.
The good news is that after decades of shifting the responsibility of rental housing to private suites and investors, we are finally getting a substantial volume of dedicated rentals that will provide an alternative to the 60s lowrises.
Monday numbers. Pretty slow week for sales: https://househuntvictoria.ca/2019/01/14/jan-14-market-update/
similiar to LF.. .. if you think ship yard is holding up economy .. just go down to shipyard and see how many people is working at busy times .. i am not impressed
Construction as an employment sector in Victoria is nearly 3 times the size of our entire manufacturing sector, shipyards and all.
Amen to that .. but here is what i think will make a dent : constructions slowing ,condos finishing and new projects reducing .. lots of paychecks comes out of temporary constructions jobs .. when construction boom ends .. so does jobs
If your premise is that the Shipyard is supporting current RE valuations, I’d disagree. If that entire Victoria Shipyard disappeared tomorrow, it wouldn’t make a significant long term difference to the CRD’s overall housing market.
The Shipyard employs about 1,100 people, which is a tiny portion of the working population in the CRD. RE has been in the doldrums several times, including for extended periods, all the while that yard was operating.
The vast, vast majority of people in Victoria have jobs in the services producing sector, which isn’t typically that high paying (and you see that in the income stats) and gets nailed in a recession. If you want to effect the housing market, strip out the next largest (and higher paying) sectors, including health care, public administration and education jobs. We’d definitely feel that.
The jobs are not going anywhere soon from Victoria, and I don’t think we will see much of a RE price drop if any in 2019, however things may change in late 2020.
The Cyclone CH-148 helicopters program is part of the Canadian $50 billion dollar arms force, scientific (icebreakers), and coast guard improvement project. I’m no sure how much Victoria Shipyards is going to get from the $4.5 billion Halifax-class Modernization/Frigate Life Extension (HCM/FELEX) program but it is going to be total in the hundreds of million once the project end in 2020. The $33 billion National Shipbuilding Strategy (NSS, 30 year program that started in 2011) will net BC $7 billion for Vancouver and Victoria (Vic Ship will see possibly $3.5 billion). There is also the ongoing submarine program at Vic Ship that worth billions.
On the non government/private side, Vic Ship will be continue on converting tote ships from diesel to LNG, repairs fishing vessels and cruise ship. The ship yards will also be continuing ferries repairs and upgrades, among many other activities. And, the $639 million New Zeland Navy frigates ANZAC system upgrade in Victoria is not going to end till 2020.
The sewage treatment plant building project is not slated to end till at least 2-3 more years so that will also keep some people working in Victoria.
Marko is a seasoned landlord. +1 to let it go and move on.
Off topic question:
Does a wood floor and tiles house sells quicker than than a laminate and vinyl floor house, if I sell it in 5-6 years?
My last house had carbonized bamboo floor and it looked amazing, however it dinged up quite quickly because of the softness. I have had slate tiles for entrance and porcelain tiles for kitchen and bathrooms in the past that are beautiful, durable, but hard and cold on bare feet. I like to have a continuous floor and perhaps the kitchen floor match the rest of the house. At the moment I’m looking at 2000 sqf of flooring and having difficult time choosing the materials.
What would you pick if you have the choice?
Main floor.
1. Strand woven bamboo 9/16″ thick wide planks.
2. Brazilian cherry 3/4″ thick.
3. Premium AC-5 12mm laminate.
Bathrooms and kitchen.
1. Travertine, or porcelain tiles.
2. Premium interlock wide vinyl for bathroom if main floor is laminate.
When governments “step in” to a market to a degree that’s greater than preventing mere force and fraud, it’s usually far too late, and too heavy.
While at one point in time this would have seemed impossible, the reality is the market would have turned on its own volition (in fact, it was). Things always look unstoppable until they stop.
As you suggest, there’s nothing new under the sun here…other than the lunatic extent we’ve taken it.
Sorry, I didn’t include the source from the posting below.
https://www.huffingtonpost.ca/2019/01/13/housing-oversupply-canada_a_23641374/?utm_hp_ref=ca-homepage
And so the cycle goes. I am sure everyone will be super happy about the vacancy tax when we are swimming in excess rental units.
Canadian House Prices To Drop As ‘Huge’ Wave Of New Homes Arrives: Report
The slowdown in Canada’s housing market will get worse before it gets any better, a new analysis predicts, because the country is about to be flooded with a “huge amount” of new homes.
“Canada has been undergoing a construction boom,” Capital Economics senior economist Stephen Brown wrote in the report issued last week. “As has been typical of historic real estate cycles around the world, new supply will reach the market just as demand is falling.”
Developers will react by cutting back on new housing starts. But the lag between start and completion means the problem will happen regardless of what developers do now, Brown suggested. Even if Vancouver stopped building new homes entirely, the oversupply in the next two years would be nearly as large as if construction continued.
All of which could have a negative effect on the economy, starting with falling house prices. “That, in turn, is likely to feed through to weaker consumer spending. Even more significantly, an end of the construction boom will weigh heavily on investment,” Brown wrote.
I’m currently paying $1280 for 1000/sqft.
I did some light research into what 2 and 3 bedroom places go for and it’s horrifying. It’s no wonder some people justify current prices as long as they can get approved. $3k/month is $900k over 25 years.
I’ve had two tenants over the years break leases and I gave them both damage deposits back with no penalties and I had new renters in the units for a higher amount. Both times tenants breaking the leases were appreciative and left the unit immaculate.
If someone signs a 1-year lease and wants to move out after 8 months or something similar not sure what the point of making it a hostile situation is. It is annoying but them trashing the unit could be more annoying. Even if the rental market sucks you’ll have to re-rent it for a lower amount when they move out after 1 year anyway.
There are a lot of people with good incomes that want a nice higher end place within the core.
I’ve noticed this for sure over the last 5 years. When I was renting out the suite at my personal residence recently I had quite a few applications from people working on the new Cyclone helicopter program at the airport and it was interesting seeing DOBs approaching mid-1990s and the quite serious salaries they were pulling in. I wasn’t even aware $155 million was invested into just the facility itself. Just seems like there is quite a bit of random stuff in Victoria that generates high paying jobs.
That all being said I can’t see how rents won’t come down a bit on the Westshore…..there is so much apartment construction it is insane plus add the fact that every other new SFH has a suite to boot as well I don’t see how it will all be absorbed so quickly.
Weather is only ever one factor in determining where to live. Life is about personal choices – what works for one person may not work for someone else.
https://www.thestar.com/news/canada/2019/01/13/vancouver-faces-brain-drain-as-young-professionals-leave-city-over-high-cost-of-housing.html
Scottsdale, AZ is 62F/17C and heading up to 70F/21C by Thursday.
What’s the weather in Scottsdale? No one ever side anything about living in pei during the winter
Dang near feels like spring out there in the sunshine.
I wonder what it’s like in…
Only a 21-degree delta. Basically a coin toss.
I’ve had a couple of rentals over the past 10 years (but only one at a time). Both upper end (4K+/month). There is no shortage of folks paying head-scratching numbers. I’ve had recent arrivals (from TO, UK) where companies will provide per diems, divorcees with well-paying jobs (Lawyers), Physician families who move around.
When renting the current place in 2016 there was a pretty overwhelming response. Partly because a lot of renters were losing their places due to people selling in the hot market, but there was also an influx of well-heeled families related to the BCIMC. Don’t expect that situation to happen again.
Maybe by Christmas. One person evenings and weekends equals a slow build. I’m just happy to be working inside where it’s dry and warm.
Oh, well then I do agree with the new RTA. Perhaps I’m naive, but when I sign a lease with someone my expectation is that they will honor the rent payments during the term of the lease. Similarly, I’m not going to kick them out or sell the place for the term of the lease. Near the end of the lease, we can negotiate a new lease, or month-to-month. At that point I know if I need to kick into high gear to find new tenants and get all repairs done. I add an addendum to each lease already that states new leases cannot increase the rent past inflation.
I have had people leave mid-lease before but so far it hasn’t been an issue because I’ve always re-rented right away. I get the current tenants to show prospective tenants the place. The prospective tenants get a chance to hear about me as a landlord and I’ve always had good feedback (on prospective tenants) from the existing ones. I’ve always gone with their choice, and so far it’s worked out well.
I also subscribe to Marko’s approach of slightly below market rent in order to have a bigger pool of potential renters.
“Don’t understand why anyone would pay that”
That’s exactly what all my family and friends said. Then we finished the first 3 units and it was fully rented before we even got the occupancy permit.
All the new stress test and mortgage rule changes are only going to keep people in the rental market for longer. There are a lot of people with good incomes that want a nice higher end place within the core.
@Barrister re:54723 I thought that once a person gets the judgement from the RTB they apply to supreme court for an Order of Possession – and so there is an order. Am I mistaken? I didn’t read up on it, and have never faced this, so not sure. I know that the decisions of the arbitrators at the RTB aren’t court orders 🙂
Ok, now I see that the RTB gives the Order of Possession, and the courts give the writ of possession.
https://www.courthouselibrary.ca/how-we-can-help/our-legal-knowledge-base/obtaining-writ-possession
not every one have the down payment and credit to buy
the rapid increase is due to in the recent influx of people and the lack of housing- perfect storm to jack up the rent .. i remember 4 years ago .. people can rent 1 bedroom places for under 1000$ a month ..
then suddenly oil patch failed , Vancouver exodus, Victoria constructions boom.. all adds up ..now that the exodus died , the constructions are finishing off .. and Albertans can’t afford to move out .. inventory going up .. wonder how long till rental revenue decelerate and reverse
An inexpensive luxury 987 fs2, 2 bd + den, 1 ba for $1585 Winterpeg townhouse is waiting for healthy young people that enjoy bobsledding and commuting by bicycle to join their community.
https://www.rentfaster.ca/mb/winnipeg/rentals/peguis/apartment/element-townhouse-rentals-336343
Don’t understand why anyone would pay that.
Might not be that long…
dont worry .. if you wait for 3-5 more years.. when constuctions in victoria dies down, condo inventory goes up ,… labour demads drops … you can get rent as low as 1200$ a month … just a prediction… some one quote me in a few years so i can see my own predictions …
“A rental unit that you happen to own isn’t “your house”, even if it’s right below the dwelling where you live.”
I understand how it works, thanks.
Well, there’s always Summerside, PEI.
Even before the new changes, fixed term != tenant must move out at the end of the term, unless the lease contract had a separate “must move-out” clause and tenant agreed to it.
WRT peace of mind (even after new changes): tenant could be asked to move out with reason (e.g. landlord family move-in, house sold, …) for a month-to-month lease, but not for a fixed term. And with good tenant, fixed term is less work for landlords, regardless new or renewed lease. Only difference now (to renew to another fixed term) is that both parties must desire it.
$1600 + utilities for 500 sqft blows my mind.
Viola P. it is a civil judgment and not a court order. The police do not enforce judgments; there is a civil procedure for that. We got rid of debtors prison a long time ago.
Things I learned on HHV this week: the joys of north island; so many home reno tips I now want to run out and buy a shack, and; portemanteau, although I had to look that one up. Thanks, gang.
Look at section 4 of the act – only says it doesn’t apply if there’s shared bathroom and kitchen.
http://www.bclaws.ca/civix/document/id/complete/statreg/02078_01#section2
I thought it didn’t apply if there was shared bathroom kitchen – but otherwise if it’s self contained and the term is long enough then it does apply.
If someone is living in your house the RTA doesn’t apply. A rental unit that you happen to own isn’t “your house”, even if it’s right below the dwelling where you live.
Sorry, I was asking why do back to back fixed terms. Because, can no longer enforce vacate terms at the end and can’t increase the rent above the caps. So I understand why yo have a fixed term when a tenant first moves in, but why do another fixed term after that?
Vacate terms are no longer enforceable and rent increases beyond the caps – even for fixed terms with (unenforceable) vacate terms – are no longer allowed.
I understand dads concern about the distinction between mom and pop landlords (like me) and commercial ones, but I still think these changes were necessary and are good.
I hated the worry that goes with fixed term. It’s not easy packing up a full household of stuff for a family of 4 plus office. Fortunately we haven’t had to move out but just having that fixed term hanging over the head made for a few uneasy nights. Happier now with the changes.
To add to rental convo
We had a tenant give notice yesterday
1 bed 1 bath, 500sq ft, top floor of a 1912 character house that was gutted just over a year ago, current rent 1500 plus utilities.
We put the add up yesterday at noon for 1600 plus utilities, we’ve had 7 emails and 2 showings booked later today, I’ll let you all know how it plays out
We have had a 0% vacancy in all 9 of our units since completing them and we hope to keep that going.
I don’t think you can require a tenant to move out after a fixed term anymore with the new rules that have taken hold, even if they signed a 1-year lease previously with a move out clause (unless it’s for owner occupation). There’s clearly still a lot of misinformation out there, a friend of mine just received a rent increase of 4.5% to take effect in February… I directed her to the new rental increase cap of 2.5% and the requirement for the landlord to provide 90 days notice, not 2 weeks. I know another family renting (apartment building) where the management company has tried to increase their rent this year by 12% with the only other option offered is to vacate. They’re challenging this too bit I’m sure a few uninformed tenants in the building might just pay it.
Fixed term gives peace of mind to both parties:
– For tenants: can’t be asked to move out during the term (except contract violation), even when ownership changes
– For Landlord: perception of no turn over during the term. People normally prefer less work or less thinking about work if possible, unless they enjoy the work.
I agree with scholar. A person can be arrested for contempt of court – which could happen for repeated failing to obey a court order. But I’ve never heard of someone in this kind of situation facing arrest. It is best to let it go, consider it a loss of doing bussiness.
The police will not enforce a civil order, you can waste money hiring a bailiff or let it go. The only recourse is a wage garnishment with the order in hand. A landlord does not have sweeping power like a government agency when awarded a civil order to apply a wage garnishment. This usually leaves them holding the bag as most wont even know where to begin. I would advise you not to threaten anyone with arrest in this case because it could land you in much more trouble. Forgive and bury the hatchet, losses are a cost of doing business as a landlord and if you haven’t learned this you haven’t been in the game long enough. There are significant tax benefits when losses occur so please talk to your accountant to ease the financial pain.
To clarify it’s the back to back tenancies with the vacate terms that were being used to increase the rents above the caps and/or to arbitrarily evict people. The increases (above the caps) in this manner are no longer allowed:
“A rent increase between fixed term tenancy agreements with the same tenant for the
same unit is subject to the rent increase provisions of the Legislation, including
requirements for timing and notice. To raise the rent above the maximum annual
allowable amount, the landlord must have either the tenant’s written agreement or an
order from an arbitrator. If the tenant agrees to an additional rent increase, the landlord
must issue a Notice of Rent Increase along with a copy of the tenant’s signed
agreement to the additional amount. The tenant must be given three full months’ notice
of the increase.” (RTB Policy Guideline 30)
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/calculators-and-resources/policy-guidelines/policy-guidelines-listed-by-number
I’m wondering why people would still use fixed term tenancies given these changes, given the changes. Would be curious to hear from landlords.
Replying to Deb
I had a tenant take off with 6 months to go in one year lease.
“Was this recently?”
It was about two years ago, and I don’t think anything has changed with Tenancy Board hearings procedures since then.
Also, in my case it was easy to serve them the required documents as I asked for employment reference letters when I leased the house to them. If they had quit their jobs and taken off to New Newfoundland it would of been different story
Yeah, I have been a residential landlord, a commercial landlord, and an industrial landlord. I will never willingly do residential ever again. However, this was not in the hot and fashionable areas of Van/Vic/Kelowna, so finding and retaining good tenants was even harder.
ScotiaBank challenges BOC assertions on rising bankruptcies:
https://www.livabl.com/2019/01/bank-canada-wrong-canadian-bankruptcies-arent-rise-says-scotiabank.html
As bankruptcies edge up, BoC’s Stephen Poloz expecting even more as rates continue to rise
Bankruptcies are up in Canada, the head of the Bank of Canada said this week, and he expects they’ll rise even more as the central bank continues to hike interest rates.
“We’re acutely aware that our decisions affect everybody — they affect the financial well-being of everybody and many Canadians are carrying a high debtload,” Poloz told reporters Wednesday after holding the bank’s key interest rate at 1.75 per cent.
“On bankruptcy statistics, I understand that they have picked up,” Poloz said when asked about the recent figures. “My understanding of the data points is that they’re picked up from an extraordinarily low level. So, there is, in any point in time, always a certain number of unfortunate folks who may lose their job or what have you and go through this process. And it wouldn’t be surprising to see things pick up a little bit when interest rates have risen.”
Poloz added the bank has deliberately been very careful and very gradual in its hiking, while reminding people the low-rate era wouldn’t last.
https://www.ctvnews.ca/canada/as-bankruptcies-edge-up-poloz-personally-responds-to-canadians-concerns-1.4249320
CMHC estimates that the number of dedicated rental apartments is about the same as the number of rental condos. Both about 25,000. No idea how accurate that count is.
What’s going on with your house? Not ready to move in yet?
Pending @ asking price of $1.1M
329 Simcoe is already off realtor.ca. Did it sell?
“I don’t like the changes to the RTA. If you have a crappy tenant then you can get rid of them at the end of the lease. Getting rid of someone month-to-month is very challenging.”
Tenancy legislation is (mostly) drafted with commercial landlords in mind. “I don’t like you and your dinners smell like shit” isn’t a reasonable ground for eviction when you’re a landlord with a 20 unit apartment building, but it might be if that person is living in your house, which is probably why the vacate clause was included in the RTA in the first place. Unfortunately, there were commercial landlords abusing it, and they ruined it for everyone. Now you’re stuck with your fish-microwaving tenant.
Maybe there should be some sort of provision in the RTA so that mom and pop landlords can get rid of tenants if they aren’t a good “fit.” That’ll have to wait until the secondary market goes back to being second-tier though. Maybe with all this purpose-built rental coming on, that will happen.
Yeah, we’re on year 8 of a month-to-month with our tenant.
And to add to the rental market convo, I’m currently in a ~1400 square foot lower floor paying $1850. The upper unit is much bigger and rents for ~2300. This last cycle it took 2 or 3 months for owners to find tenants for the upper unit. Previously there was never any vacancy.
My understanding is that if a tenant breaks a lease, they’re liable for the rent until a new tenant is found. A landlord must make every effort to re-rent the unit (advertise, no rent increase etc.)
I don’t like the changes to the RTA. If you have a crappy tenant then you can get rid of them at the end of the lease. Getting rid of someone month-to-month is very challenging. I don’t know why they didn’t modify the RTA to cap any rate increase between leases to the same party.
I’ve always checked the ‘must move out’ box but added an addendum that a new lease can be negotiated with any increase capped at inflation. I’ve never actually increased rent because I’ve been lucky and had great tenants. Similarly, I’ve never sold a place out from tenants or pulled the ‘I’m moving in’ move.
Don’t think I’d make a good RE mogul.
@yvr-yyc-yyj
We’ve always done month to month, never bothered with a fixed lease when renting to tenants.
We took off 8 months into a one year lease when we bought our house. Was prepared to pay the 1 month penalty but landlord either didn’t know or chose not to enforce it since they didn’t say a peep about it.
Was this recently?
replying to caveat emptor
“Can’t tenants just take off anyhow even if they signed a lease? In theory you could pursue for damages, but how many would bother?”
You need to have a tenancy board hearing to keep the damage deposit and you can ask for lost rent and costs. I had a tenant take off with 6 months to go in one year lease. They actually bought a house and didn’t even bothering talking to me about breaking the lease. As a landlord you need to minimize your loss by putting on new adds and trying to find a new tenant. My rental was not in Victoria, so i was not able to find a new tenant who wanted a short term rental.
The Tenancy Board hearing is only $75 and its by phone, so not so difficult. In my case the judge was not impressed with the tenants and awarded me 3 months rent, plus 6 months of utilities and all my costs. This is a Court order and the tenant can be arrested if they don’t follow it. In my case it took a few months but the tenant paid the full amount owed to me.
“Can’t tenants just take off anyhow even if they signed a lease? In theory you could pursue for damages, but how many would bother?”
You are right. Enforcement is a consideration with civil suits – is there an ability to pay? Anyway, the fixed term tenancies, used as they were to massive increase the rents (and get around the established caps) were totally unfair to tenants.
Anyone who wants the details should read the policy guideline, I only know about it generally 🙂
There have been important changes to the RTA (Residential Tenancy Act) in the past couple years, primarily in response to complaints/concerns that the Act didn’t adequately protect tenants in the province. As the landlords on here are likely aware, it was previously possible to use back-to-back fixed term tenancies. This was a common approach and many landlords would use the fixed term back-to-back to increase rents above the maximums set by the province (above the rental increase caps). Obviously this was a big loophole that was exploited by many landlords to increase the rents above the amounts allowed. In other Canadian provinces there is not commonly such a loophole. Finally, after years of criticism, the government did something about it and changed the RTA such that now fixed term tenancies are only allowed in very limited circumstances.
Here’s a link to a menu with RTA topics:
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/tenant-notice
Also, Residential Tenancy Policy Guideline 30, published in October 2018, confirms that decisions before the RTB will be in accordance with the new rules for fixed term tenancies.
Here’s section 13.1, which outlines an exception: Fixed term tenancy — circumstances when tenant must vacate at end of term
13.1 (1) In this section, “close family member” has the same meaning as in section 49 (1) of the Act.
(2) For the purposes of section 97 (2) (a.1) of the Act [prescribing circumstances when landlord may include term requiring tenant to vacate], the circumstances in which a landlord may include in a fixed term tenancy agreement a requirement that the tenant vacate a rental unit at the end of the term are that
(a) the landlord is an individual, and
(b) that landlord or a close family member of that landlord intends in good faith at the time of entering into the tenancy agreement to occupy the rental unit at the end of the term.
It is apparently also allowed where the tenancy is a sublease.
I think there are grandfathering rules, but would have to read the policy guideline more.
Anyway, these are – thankfully – mostly a thing of the past.
Can’t tenants just take off anyhow even if they signed a lease? In theory you could pursue for damages, but how many would bother?
Not to stir the pot, and I am too lazy to look it up, but wasn’t someone on here saying that the initial money laundering report and the associated dollar amount of $100 million was inconsequential and would be quickly forgotten. I believe Hawk called BS and said that the amount was at least 10 times larger or something to that effect…
Hawk +1 on that call.
“Author of secret internal report says $1B laundered through casinos — 10 times official estimates”
https://www.cbc.ca/1.4972063
Replying to Dad
“My other tenants have indicated they want to stay, but leases are not up until April. I will give an update then.”
“They can stay if the lease is not renewed…tenancy just goes month-to-month instead.”
I have always ticked the box on the Tenancy boards lease for the tenant to move out at the end of the lease, but of course if both party’s were happy we always extend the lease.
I know the NDP changed this, so I would have to look at all options available if I had a bad tenant.
I think a fixed term lease gives security to both party’s. I have never had a tenant on month to month, so I definitely would not like it, as I self manage and if I am away on vacation or out of town I would have to rush back to find a new tenant.
Sensible landlords appreciate good tenants. It’s not worth loosing a good tenant over a few dollars a month. The damage that can be done by a poor tenant will far exceed any gains you might think you made in a grab for maximum rent increases.
replying to Ks112
“Previous rent $1,595 plus 40% of gas & electricity. New rent $1,620 plus 40% of gas & electricity.”
“So you only increased the rent by 1.57%, isn’t this less than the allowable cap? Also, just wondering if you think that’s the current market value for the suite?”
The current tenants are very quiet, and have not asked for anything. I wanted to give them a bit of a break, so I only raised the rent $25 to cover my anticipated City tax increase.
I think the current rent is around fair market value.
what do you mean incompetence .. its a perfectly planned stupidity … some one is going to get a new house out of this incompetence… who knows .. it is within the whelm of possibilities
“My landlords have religiously raised rent by the max amount every year since I moved in. If the gov didn’t implement the cap, I would have had double the % increase. So from where I’m sitting, it was plenty effective. You can’t look at the broad stats which include renovictions and say it does nothing.”
That is the purpose of the cap. It limits rent increases below what a hot market will bear during a tenancy. But once the tenancy ends, the suite will be rented at market value. Most apartments turnover after 5 years, so it does nothing to preserve affordability over the long term, and it isn’t intended to.
What it does do, is discourage mobility because the longer you stay, the further below market value your rent will be. That tends to benefit older people at the expense of younger ones, and probably exacerbates the supply problem which drives rents even higher…particularly in desirable areas.
Possibly $1B money laundered…. And we can’t prosecute because of incompetence and inaction everywhere. A disgrace.
https://www.cbc.ca/news/canada/british-columbia/b-c-casinos-money-laundering-foi-report-1.4972063
It’s not that it does nothing. It’s that it’s not a solution to the problems of rising rents. Great for existing tenants who can stay forever, but all that does is increase the gap between what a new rental costs and existing rents. A lower cap helps those staying at the expense of those that are moving. If the cap is too low it will also reduce the number of rentals by making it not viable to operate one.
To be clear I’m in favour of the cap, and I think even the current CPI cap is not a problem for rental viability, but the cap alone does not help the problem of overall rising rents.
My landlords have religiously raised rent by the max amount every year since I moved in. If the gov didn’t implement the cap, I would have had double the % increase. So from where I’m sitting, it was plenty effective. You can’t look at the broad stats which include renovictions and say it does nothing.
“My other tenants have indicated they want to stay, but leases are not up until April. I will give an update then.”
They can stay if the lease is not renewed…tenancy just goes month-to-month instead.
“The question is – will the current Victoria council allow rentals to be replaced with market condos? My guess is that they would throw roadblocks in the way of that. In other munis perhaps.”
I am almost certain that if the practice of evicting entire buildings so landlords can “renovate” starts to pick up again, the province will slam the door shut this time. And in any case, I don’t think it will be tolerated for much longer…well, assuming they survive the Nanaimo by-election. On the other hand, if the vacancy rate creeps up to 4% or so, landlords will probably just go back to the practice of renovating apartments piecemeal so maybe it won’t be an issue going forward.
I also think you’re right about the City of Victoria. Can’t see the mayor or council throwing support behind the demolition of affordable rental housing. Esquimalt maybe?
Not necessarily end of life, but quite a few need significant renos. That’s why we’ve heard so much about renovictions.
The question is – will the current Victoria council allow rentals to be replaced with market condos? My guess is that they would throw roadblocks in the way of that. In other munis perhaps.
On another note. Kind of pathetic that 50 years is considered end of life for a building. Lots of people in Europe living in pretty decent buildings from 100s of years ago.
“Previous rent $1,595 plus 40% of gas & electricity. New rent $1,620 plus 40% of gas & electricity.”
So you only increased the rent by 1.57%, isn’t this less than the allowable cap? Also, just wondering if you think that’s the current market value for the suite?
FYI, my personal rental market update.
I own two houses in the Victoria Core, both have up and down suites.
I just renewed one tenant for a one year lease. Its a down suite, 1,200sq.ft. 1 bedroom and Den, with in-suite washer & dryer, 8′ ceilings, updated in 2015, driveway parking.
Previous rent $1,595 plus 40% of gas & electricity. New rent $1,620 plus 40% of gas & electricity.
My other tenants have indicated they want to stay, but leases are not up until April. I will give an update then.
Out with the old. In with the new. Rentals that is…
I would treat this house as if it’s address is Cordova Bay Road. Compare that to 4878 Cordova Bay Rd MLS 402258 which is a newer home with a suite in place and private backyard. That home is listed at $875k and is currently 37 DOM. I think $899k is a pipe dream for the house on Timber Lane.
MLS 402254 1008 Symphony Ln just went pending and while it’s a bit smaller home, it’s in a much better neighborhood (Sunnymead). That home needs some updating but very much liveable as is with a nice backyard. That pending price is $837k and the assessed on this property is $75k higher than Timber Lane.
What should 1150 Timber Lane be priced at? No idea but I’m guessing it won’t go above $850k at best.
https://www.ratespy.com/rate-hikes-with-this-growth-for-real-01107820
Assessments could trigger higher rents in capital region
A surge in the assessed values of Victoria’s rental buildings, coupled with new rules around rental rates, could translate into reduced investment in existing buildings and fewer new developments, says the head of Landlord B.C.
https://www.timescolonist.com/real-estate/assessments-could-trigger-higher-rents-in-capital-region-1.23588815
Here is that original Timber Lane listing from 2015:
http://www.karendinnie-smyth.com/property-details/352404
So the first owner made out great if they sold it for almost $200k profit without doing anything. How about the second owner? How much do you guys figure the reno costed after spending $712k on the house?
And finally what is it worth in the current market?
I know the affordable rental people don’t like it, but more new construction does mean that the rents for those 60s buildings are under less pressure, so those will likely be the bulk of the affordable rentals.
One thing I didn’t talk about in the article (and likely should have) is that we will see an accelerating trend of those old rentals buildings being renovated or demolished as they reach end of life. So we will see an increasing rate of removal from rental stock at the same time as the accelerated construction.
For sure, just look around Langford. Much of the low rise construction is actually rentals. Will be very interesting what all these places get priced at.
I was just getting ready to post this one as well. Thank you Charlie for putting that one up. I nearly went to see it back in 2015 when first on the market but the amount of work needed was huge at that time. I’m going from memory here so I could be off a bit but the first flip in 2017 for $712,000, I don’t remember seeing much if any updating. Then the next flip in 2018 at $884,000 there had been quite a bit of updating. This new sale – looks like they did a bit more in the 6’3″ (or less) basement. Love the electrical cord coming out of the wall and into a socket in the downstairs “bedroom”.
Timber Lane is a very nice street but this house sits right on the corner of a busy, noisy section of Cordova Bay Road. I wonder if they got tired of the noise? And I’m pretty sure you can’t see any bits of the water until you go up the street a bit.
Will be interesting to watch.
LF,
Looks like the current owners will be left holding the bag. It will be interesting to see what that place sells for in the end.
Charlie,
That house has been flipped multiple times since 2015. Started out at 565k.
They must have hated the place.
1150 Timber Lane, Cordova Bay
Paid 884K Jan 2018
Ask 899K Jan 2019
Ass. 852K Jul 2018
Timber indeed.
Great post Leo.
This article says “Langford is doing close to 50 per cent of all housing starts in the [Victoria] CRD”, and this is “an obvious shift toward building rental housing in Langford”. Is that what you found also?
https://www.westerninvestor.com/news/british-columbia/affordable-housing-fuels-construction-in-greater-victoria-1.23529024?rew.ca%2Fnews=rew.ca%2Fnews
“Casey Edge, executive director of the Victoria Residential Builders Association, said there has been an obvious shift toward building rental housing in Langford. “Clearly, builders are already choosing Langford as a more efficient and cost-effective place to build. Langford is doing close to 50 per cent of all housing starts in the CRD.”
Construction [in Victoria CRD] continues to be driven by strong migration from elsewhere in B.C. and across Canada by retirees or people attracted by the region’s robust and diverse economy.
In the first 11 months of the year in the region, 3,498 homes were started, slightly behind last year’s pace of 3,658 through November. The vast majority of the construction has featured rental accommodation, with 2,359 new apartments started so far this year. That compares with 2,389 by this time last year.”
Latest video from Formafist – really quite scary if any of his extrapolation is even close to accurate.
“Canada’s Real Estate Bubble Has Popped”
https://www.youtube.com/watch?v=fwpt671CEW8
I’ve said pretty much all I have to say. After years on this site many posts read as repetition, pointless argument, or personal attacks.
My opinion remains the same: buy when you can afford to, buy something with a suite as risk management if you can, and be prepared to stay put for seven years.
The City of Victoria’s Airbnb enforcement measures will also bring some rental units back on the market.
The new supply is likely going to be be at the upper end of the rental market.
High end rents may drop a bit, but there doesn’t seem to be much in the way of purpose-built affordable rental housing coming onto the market?
Nice graph Leo! From the graph it seems like a vacancy of 4% or higher is the inflection point for rents to actually decrease year over year. I wonder if this is a Victoria specific phenomenon or if it is a benchmark for all places.