Calgary Alberta Mortgage and Real Estate News

New-home construction in Canada is set to cool slightly next year, and would likely drop more precipitously if not for the widespread adoption of longer-term mortgage products, according to one economist.

Housing starts are expected to pull back about 6 per cent in 2008 as rising prices curb demand, according to an outlook report by the Canada Mortgage and Housing Corp (CMHC).

“The pullback in housing starts next year will be mainly due to increases in house prices in recent years, which have pushed mortgage carrying costs higher,” Bob Dugan, chief economist at CMHC, said in a statement.

This would still put new-home construction at a relatively strong 214,000 units in 2008, the seventh consecutive year in which they’ll top the 200,000 mark, according to the report.

Lofty prices in the country’s hottest markets, particularly Western Canada, would likely take a much bigger bite out of new construction if it weren’t for longer-term mortgage products, said Derek Holt, assistant chief economist at Royal Bank of Canada.

Last year, the federal government extended the maximum amortization period for mortgages from 25 years to up to 40 years.

Consumers have embraced these products, which raise the cost of a mortgage over time but lower the entry hurdle to buying a home because the longer payment period allows for smaller monthly payments.

“It’s my belief we would be 10 to 20 per cent below 200,000 housing starts next year if it wasn’t for the impact of these mortgage innovations,” Mr. Holt said.

Sixty per cent of new and rollover insured mortgages are for amortization periods of longer than 25 years, and half of those are for 40 years, Mr. Holt said.

The economist expressed concern that people taking out 40-year mortgages aren’t leaving themselves any buffer in the event of future rate shocks.

Buyers should also be aware of the much higher overall interest cost of a longer-term mortgage.

For example, the total interest on a $300,000 mortgage can soar from $286,161 over the life of a 25-year mortgage to $498,416 over a 40-year amortization period - adding more than $200,000 to the cost of the home.

In the resale market, sales of existing homes are poised for their best year on record, with slightly more than 521,000 units expected to be sold in 2007, as measured by sales on the Multiple Listing Service sponsored by the Canadian Real Estate Association.

The 7.8-per-cent increase in volume from 2006 is attributable to booming sales in the Prairie provinces.

However, purchases of resale homes are expected to slow somewhat in 2008 to slightly more than 500,000 units, a drop of about 3.9 per cent.
 

The Bank of Canada’s 4.5-per-cent overnight lending rate “is appropriate” but the bank must “look at the causes” of the rising loonie over the next three and a half weeks as it drafts its Oct. 16 interest-rate announcement, governor David Dodge said in speech Tuesday.”We need to assess the effect of movements in the exchange rate on the balance of aggregate demand and supply in the Canadian economy,” Dodge said, in what observers took as a hint that an immediate interest rate hike is unlikely as the bank examines the ongoing fall-out from this summer’s market turbulence.

“Overall, it looks like the bank is solidly on hold until they have a chance to assess the impact of the tightening of credit conditions on the real economy, and the impact of the most recent appreciation of the Canadian dollar,” Jacquie Douglas, an economics strategist with TD Securities, wrote in a note following the speech.

In his speech, Dodge noted “significant upside and downside” inflationary risks, observing that stronger-than-expected household demand could drive up inflation while spillover from the sputtering U.S. housing market could have the opposite effect.

Assessing which of those risks is more serious is what “we will be concentrating on between now and our next interest rate announcement,” Dodge told reporters after his speech to the Vancouver Board of Trade.

Of particular concern are rising housing prices, he said, which make up about five per cent of the country’s consumer price index.

“When, on average, new housing is rising at eight per cent, that really puts an upward bias into the CPI and it’s clearly something that in hitting our target we are very concerned about,” he said.

But he offered little hope to Canadian manufacturers, who have pressed the bank to cut interest rates as a way of dropping the value of the loonie, whose flight to parity has slashed returns in the auto and forestry sectors.

The rise in the price of resource products relative to manufactured goods “sends a signal that real resource labour and capital really have to be diverted from now lower value-added activities in manufacturing to higher value-added activity in the resource sector or in a number of service sectors,” Dodge said. “The lesson of history is that not to adjust is just not an option. And we have to find ways to get on with it.”

Still, while noting that a rising currency has little direct impact on inflation, “to the extent the rise in the Canadian dollar affects our exports in a negative direction and our imports in a positive direction, obviously that effect really does flow-through into the balance of demand and supply of Canadian goods and services. And that precisely is what we will have to take into account,” Dodge said.

His comments suggest that “a tighter Canadian monetary policy is not likely and, if anything, pointed to a higher probability of an easing if economic conditions get much worse,” Scotia Capital economist Karen Cordes wrote in a note.

For a generation, Americans have had a reason to feel superior to Canadians: Our dollar was worth more than theirs. Ours was a full dollar; theirs was discounted. And thus it was a shock last week when the Canadian loonie stole across the line of superiority and registered a value of $1.0008.

There were several reasons for this. Oil is the obvious one. Canada is endowed with much oil and gas, and the rise in its value tends to lift the currency. Americans have a large appetite for that oil and gas, perhaps more than is good for them. Another reason for the muscular loonie has been the financial probity of Canada’s conservative government. Unlike our conservative government, Canada’s has really and honestly balanced its budget.

This year, Canada is planning to run a 2-percent budget surplus. Canada’s Treasury has announced a long-term plan to pay off the central government’s debt, allowing cuts in the rates of personal income tax.

Imagine that: Pay off the debt, then cut the tax.

Our conservative government doesn’t think that way. It cuts taxes first, increases domestic spending and starts a war. Our conservative government put the whole smorgasbord on the credit card and argued that there would be no financial indigestion.

When indigestion arrived in the form of a subprime-mortgage crisis, Fed Chairman Ben Bernanke slashed the interbank lending rate. Probably by that time, it had to be done but it was not what a prudent, fiscally sound country should have had to do.

With the interest-rate cut, the dollar fell again, because it is less rewarding to park one’s funds at a lower rate of pay.

Now the greenback swims in the same pond as the loonie, which as recently as January 2002 was worth just 62 cents on the dollar.

And it’s not just Canada: The dollar has fallen this year against the euro, the pound, the yuan and the yen, and also against such proud players as the Polish zloty, the Russian ruble, the Philippine peso, the Mexican peso and the Brazilian real.

We shall have to be polite to the Canadians.

The Bank of Canada is universally expected to hold its interest rates steady at 4.5% tomorrow.

Although the unemployment rate is at a 33-year-low of 6.0%, wages are rising at a 3.7% annual clip, the economy expanded 3.4% in the second quarter and core inflation has been above its 2% target for an entire year, the sludge dripping from North American debt markets is expected to persuade the bank to stay its hand for now.

It will take time to see whether this sludge will contaminate broader lending, mingle with the U.S. housing slump and cause the United States and Canadian economies to slow. Canada also has some sludge of its own to absorb from the asset-backed commercial paper blow-up here.

It is ironic that as the bank holds rates in response to the slump in U.S. housing, it may further stoke a Canadian housing market still on a tear and vulnerable to risks of its own — like the rising labour and materials costs the bank was previously trying to restrain.

While U.S. building and sales have cratered and prices have dipped 3.2% on the year, Canadian resales rose nearly 10% in July to a new record and average prices jumped 12.6% to a record $311,495.

Toronto high-rise sales, meanwhile, are in their second year of 24% increases year-to-date. The luxury hotel-condo — usually commanding the top floors of some architectural jewel and bearing a marquee name like Ritz or Four Seasons — is the latest boom’s must-have.

“It is now common to see 2,000-to 2,500-square-foot condos selling for $2-million or more with property taxes and condo fees to match,” Sherry Cooper, chief economist at BMO Capital Markets, said in a recent note. “Per square foot, condo prices are now higher than single-family home prices of similar quality and location.”

At the Four Seasons hotel-condo in Yorkville for example, a 2,500-square foot condo sells for more than $4-million; a 3,900-square-foot penthouse has a $7.4-million price tag.

Although the prices may not be quite so lofty, they are racing across the country, too, with Saskatoon joining Calgary as the latest hot spot.

Analysts are at pains to point out how the Canadian market is in much better health than the United States.

“The current subprime default rate in Canada is less than 3% compared with 13% and growing for the United States,” Warren Lovely, economist at CIBC World Markets said in recent note. And there isn’t much subprime debt in Canada anyway. It accounted for barely 5% of mortgage originations during 2005-06, well below the 20%-plus share in the United States, Mr. Lovely said.

As well, Canadians have taken out fewer mortgages with teaser or adjustable rates and they have traditionally relied less on home lines of credit to fuel consumption.

Builders and lenders in Toronto, burnt by the 1990 real estate bust, are smarter too.

“There’s a healthy amount of discipline that has been inserted into the Canadian system that was a direct result of the problems of ‘89, ‘90, ‘91,” said George Carras, vice-president at RealNet Canada Inc. Typically a project is 60% to 70% sold before a shovel breaks ground. Deposits are also quite significant and required at various milestones over the course of construction.

At the Four Seasons for example, the buyer must put down a $50,000 deposit, followed by additional deposits equal to 25% down at the end of the first year after signing — with still more than two years to go before occupancy, Ms. Cooper notes.

“There is an incredible rigour around the interim financing, which is typically done after a minimum pre-sales target has been met and enough due diligence is in place — there is enough money to get their loan back on the completed building,” Mr. Carras said.

Yet trouble can come rumbling out of nowhere, as the Canadian ABCP market storm has shown.

Instead of buyers walking away from deposits as prices slid in the United States, Canadian developers might run into trouble grappling with runaway costs, especially if borrowing costs become stickier north of the boarder.

Canada is at, or very near full employment in the construction industry, and competition for labour has become fierce, Mr. Lovely said. Material costs have also soared.

Under a supply-side crunch, a developer might go bust before he can bring his project to completion, leaving buyers hanging.

Mr. Carras agrees the biggest risk for the Toronto market now appears to be execution risk, especially with some 60 of the 160 or so developers building new homes in the Greater Toronto Area having operated for five years or less.

“The things to watch are in the execution risk–being able to deliver the units that are sold, within budget to people that will be closing when they are supposed to be closing,” Mr. Carras said. “That’s the risk profile of this marketplace because there are a number of people in this space that have not been in this space before.”

So far though, the market appears to be functioning smoothly and the condos are flying off the shelves.

But as the U.S. market shows, sentiment can sometimes turn on a dime — all the more reason for the Bank of Canada to hope this subprime mess sorts itself out and it can get back to raising rates.

Calgary homebuyers hunting for reduced prices on remodelled former marijuana-growing operations may be getting more trouble than they bargained for.

Homes renovated to clean up mould and indoor air problems caused by defunct grow ops may still be unfit to live in, says a federal researcher who will study the problem this fall.

Fungicides, insecticides, solvents and other chemicals used in drug-making operations are absorbed by drywall, carpeting, wood, subfloors and concrete basement floors, says Virginia Salares, a senior researcher with Canada Mortgage and Housing Corp.

The chemicals may also be found in backyards, where they are frequently dumped.

“People cannot take for granted it’s safe,” says Salares. Vapours from chemicals can permeate the entire house, not just the rooms where the plants were grown.

The health risks vary, depending on the concentrations of chemicals used, how long the grow op was in operation, and the age, immune systems and health conditions of the people who move in.

“You wouldn’t want to put an infant or a child under those conditions, being exposed to gases,” Salares said.

Calgary police say they raid 120 to 140 residential grow ops each year. A typical bust seizes 50,000 pot plants worth upwards of $60 million annually.

The homes, which are predominately located in the city’s suburbs, are usually unoccupied, according to Staff Sgt. Monty Sparrow.

“It’s pretty steady. We’ve gone from mom-and-pop operations to an organized crime situation,” said Sparrow.

The Calgary Health Region posts homes condemned as grow ops on its website.

Former city grow ops are identified on Internet real estate listings disclosing the toxic past.

One home in Harvest Hills has a reduced price reflecting its drug-house history.

Police estimate there are about 50,000 grow ops in Canada, although the exact number varies.

Grow op homes typically sell for 25 to 30 per cent off market value. Despite the risks, lower prices attract buyers, says Ottawa real estate agent Richard Rutkowski, who recently represented the seller and buyer of a former grow op that had been on the market for two years.

“There’s a buyer for everything,” he says. “Ironically, the (nearby) hydro lines posed more of a deterrent than the actual grow house.”

Real estate agents have to ensure everyone involved in a sale is fully aware of the home’s state, says Rutkowski. He estimates that for every 10 people interested in a property, eight will back out when they learn it’s a former grow op.

Other agents refuse to list grow ops, and counsel their clients to avoid them.

“There are too many unknowns, especially with the chemicals,” says Winnipeg realtor Cindi French. “I personally would never consider them a good deal at any price.”

Salares completed a study this year into mould and indoor air quality in rehabilitated grow ops. It noted that while police succeed in identifying and seizing many grow ops, marijuana growers often avoid detection by buying and selling houses quickly.

“The homes are superficially repaired and sold to unsuspecting buyers, who may be unable to locate the previous owners,” the report states.

Growers typically pack hundreds of plants into small spaces with high moisture and no natural light or air circulation. As a result, the plants get fungal diseases and insect infestations that are treated with high doses of chemical pesticides. Growers are unlikely to use organic solutions or dispose of chemicals in an approved fashion, Salares says.

“High productivity is their goal: the most plants in the shortest time possible.”

Salares is now studying which chemicals are being used in grow ops, how they’re stored, how various surfaces absorb and give off toxic vapours, and how a house can be rehabilitated.

Bob Linney, communications director for the Canadian Real Estate Association, says guidelines for rehabilitating a former grow op and standards for air quality will be invaluable to real estate agents.

Rehabilitating a former grow op can cost anywhere from $3,000 to more than $100,000, depending on how long it was used, how long it stood empty and what changes the marijuana growers made, says Marie Dyck, who worked with Salares on the first study.

People who knowingly buy former grow ops because they’re good deals should think twice, adds Salares.

Real estate fraud is costing Canadians millions of dollars each year — perhaps even more than a billion — and becoming an “incredibly growing industry.”One of the country’s largest title insurers, First Canadian Title, says the upcoming busy real estate season in the spring can be a breeding ground for real estate scams, often averaging as much as $300,000 per case and industry estimates for how much real estate fraud costs Canadians range between $300-million and $1.5-billion each year.

On Thursday, First Canadian Title and the Consumers Council of Canada kicked off a public awareness campaign in Calgary warning homeowners of the growing danger. March is fraud prevention month across Canada.

Bill Huzar, president of the Consumers Council of Canada, said the real issue is there are so many different varieties of fraud but “this is one that is really hurtful because when the ordinary Canadian makes their biggest investment probably, the most expensive item they ever buy is their home.”

“The most difficult thing to understand is that people who are most at risk are people that have lived in their homes a long time, have increased equity because they’ve paid their mortgage down and now they’re feeling really good. And that’s the prime target,” said Huzar.

“It’s an incredibly growing industry.”

He said the risk is great in a real estate market such as Calgary’s, where the value of homes has risen so dramatically in the past year. As a homeowner’s equity has soared, so has the risk of becoming a victim of fraud, added Huzar.

Susan Lawrence, who was a victim of real estate fraud in Toronto, said police have told her this type of crime is easy and “is more lucrative and safer than dealing drugs.”

“The message is to be vigilant. Check your records. Check that you own your house,” said Lawrence. “If you’ve got any equity in it whatsoever, get title insurance because you won’t be stuck with legal bills of tens of thousands of dollars in fighting to get your house back.”

Lawrence put her house up for sale in the fall of 2005. Thieves stole the house in November and she discovered the theft in February, 2006. Thieves took out a fraudulent mortgage on her home for almost $300,000.

“A girl posed as me. Said she was selling the house. Sold it to another fraudster. The fraudster had all kinds of fake ID. … Then they went to the bank and got a mortgage for $300,000 and disappeared with the money,” she said.

Mortgage fraud occurs when individuals fabricate their qualifications to obtain a mortgage when buying a house. There is also mortgage fraud for profit, when someone intentionally defrauds a lender or a homeowner of their interest in a property through identity theft.

Ownership of a property is transferred fraudulently from the rightful owner to the criminal, who then sells or mortgages that interest and makes off with the funds.

Julia Jones, assistant vice-president, Western Region, First Canadian Title, said in 2006 the company started a process of underwriting title insurance policies to detect fraud in an attempt to prevent it.

“We prevented $20-million of suspected fraud, mortgages, and transactions in one year which involved 52 properties,” said Jones. “That gives you a pretty good idea that there is some serious concerns.

“As consumers, they need to protect their identity. That’s really important. … It’s important to do a credit search on yourself every once in awhile to make sure there’s no unusual activity. We recommend you even do a title search of your property from time to time to make sure there’s no unusual activity. And then, although title insurance doesn’t prevent fraud, it certainly can help you if you are a victim.”

Resale housing activity in Canada’s major markets set a new record in January 2007 according to statistics released by The Canadian Real Estate Association (CREA).Seasonally adjusted MLS® home sales in Canada’s major markets totaled 30,359 units in January 2007. Led by gains in Vancouver, Edmonton and Toronto, seasonally adjusted activity rose by 3.4 per cent from December 2006 and surpassed the previous monthly record set in August 2005 by three per cent.

Seasonally adjusted activity set new records in Edmonton, Saskatoon, Ottawa and Saint John. Sales also reached their second highest monthly level on record in Calgary, and their third highest level on record in Toronto.

Seasonally adjusted MLS® residential new listings numbered 48,035 units in January, up 3.1 per cent from 46,579 units in December. The monthly increase resulted largely from an increase in new listings in Vancouver and Toronto.

The monthly increase in sales was slightly larger than for new listings, which caused the resale housing market to become slightly tighter in January compared to the previous month. Markets in Toronto and Montreal became tighter in January than in any other month in the past year.

The major market MLS® residential average price in January rose 11.2 per cent year over year to $299,318. Average price reached its highest monthly level on record in Calgary, Edmonton, Saskatoon, Hamilton-Burlington, London & St. Thomas, and Quebec City.

“Unseasonably warm weather in some regions may have boosted MLS® home sales activity in January,” said CREA Chief Economist Gregory Klump. “Transactions also rose in each of the three previous months. That clearly shows that resale housing activity continues to be supported by the same factors that have boosted the housing market over the past several years.”

“Low mortgage interest rates, high employment, rising incomes and upbeat consumer sentiment will keep the housing market on a strong footing for the foreseeable future,” he added.

Edmonton apartment rents are climbing while vacancies have fallen to their lowest level in five years.”The apartment vacancy rate in the Edmonton region fell from 4.5 per cent in October 2005 to 1.2 per cent this October,” Canada Mortgage and Housing Corporation reported Thursday.

Demand is boosted by strong in-

migration and by a healthy job market that lets some young people leave their family homes — and others split from shared accommodation to their own apartments.

Meanwhile, the number of renters moving to home ownership has fallen as interest rates and house prices have risen.

“On the supply side, rental apartment completions have been weak in 2006,” CMHC noted. “A number of rental units have been converted to condominiums, further reducing the supply of apartments available for rent.”

Average rents for two-bedroom units in the Edmonton region now are $808 — up 10.4 per cent in the 12 months through October, 2006.

Compounding that, rental incentives were offered by 19 per cent of landlords in October, 2005 — but by only three per cent this October.

In 2007, “demand for rental accommodation will continue to outstrip new supply, with apartment vacancies expected near 0.9 per cent,” predicted Richard Goatcher, CMHC senior market analyst.

“A lot of landlords have told us there will be further increases in January,” Goatcher said. In 2007, he expects rents to rise about 12 per cent.

The Canadian Federation of Apartment Associations issued a news release Thursday, arguing that vacancy rates are misleading.

“Even where vacancy rates are low, rental suites are still available because of tenant turnover,” it said. “In Calgary, the vacancy rate is 0.5 per cent but the availability rate is 1.6 per cent.”

In October, only 241 Calgary apartments were vacant — but another 492 units were available through turnover.

The CFAA acknowledged that “due to very low incomes, some households cannot afford to rent apartments of the size they need.”

CFAA president John Dickie recommended that the federal government help with income supports rather than construction subsidies.

“Portable housing allowances are the most cost-effective way to make housing affordable for low-income Canadians,” he said. “Unlike many other housing programs, they also preserve choice for tenants.”

CFAA member groups represent owners and managers of more than one million rental units.

The average rental apartment vacancy rate
in Canada’s 28 major centres(1) decreased slightly by 0.1 of a percentage
point to 2.6 per cent in October 2006 compared to last year, according to the
Rental Market Survey released today by Canada Mortgage and Housing Corporation
(CMHC).
    “Solid job creation and healthy income gains helped to strengthen demand
for both ownership and rental housing,” said Bob Dugan, Chief Economist at
CMHC’s Market Analysis Centre. “High levels of immigration were a key driver
of rental demand in 2006, as was the increasing gap between the cost of home
ownership and renting. These factors have put downward pressure on vacancy
rates over the past year.”
    “However near record levels of existing home sales and the high level of
housing starts in 2006 show that home ownership demand remained very strong,
and it continues to apply upward pressure on vacancy rates”. Adding to this is
the high level of condominium completions in some centres. Condominiums are a
relatively inexpensive type of housing for renters moving to home ownership.
Also, some condominium apartments are owned by investors who rent them out.
Therefore, high levels of condominium completions have created competition for
the rental market and have put upward pressure on vacancy rates.
    The centres with the highest vacancy rates in 2006 were Windsor
(10.4 per cent), Saint John (NB) (6.8 per cent), and St. John’s (NFLD)
(5.1 per cent). On the other hand, the major urban centres with the lowest
vacancy rates were Calgary (0.5 per cent), Victoria (0.5 per cent), and
Vancouver (0.7 per cent).
    In British Columbia, vacancy rates declined in Vancouver (down 0.7 of a
percentage point to 0.7 per cent) and Abbotsford (down 1.8 percentage points
to 2.0 per cent) between October 2005 and October 2006, but were unchanged in
Victoria (0.5 per cent). The rapid growth of British Columbia’s population and
the higher cost of homeownership continue to fuel strong rental demand. For a
third year, Victoria remains one of the tightest metropolitan rental markets
in Canada.
    In the Prairies, vacancy rates were down in four of the five metropolitan
areas. Very high net migration to the region and a significant jump in
mortgage carrying costs due to higher home prices put downward pressure on
vacancy rates. Edmonton’s vacancy rate decreased by 3.3 percentage points to
1.2 per cent between October 2005 and October 2006 - the sharpest drop among
Canada’s major centres. Vacancy rates decreased to 3.2 per cent in Saskatoon
(down 1.4 percentage points) and to 0.5 per cent in Calgary (down
1.1 percentage points).
    In Ontario, vacancy rates were lower in five of 11 major centres and
unchanged in two. The rising cost of homeownership, high immigration, and
improved job prospects for youth were largely responsible for boosting rental
demand across the province. These factors helped offset upward pressures on
vacancies triggered by higher condominium and rental apartment completions.
The vacancy rate in Ottawa decreased by one percentage point to 2.3 per cent,
while in Toronto the vacancy rate declined 0.5 of a percentage point to
3.2 per cent.
    Vacancy rates went up in three of Quebec’s six major centres and remained
unchanged in one. Low mortgage carrying costs continued to draw renter
households toward homeownership. This, combined with weak job opportunities
for youths, held back growth in rental demand. Completions of rental units
targeting seniors also helped boost vacancy rates in some Quebec centres.
Gatineau’s vacancy rate increased from 3.1 per cent in October 2005 to
4.2 per cent in October 2006, while the vacancy rate in Montréal increased by
0.7 of a percentage point to 2.7 per cent over this period. Québec saw a
modest 0.1 percentage point increase in its vacancy rate to 1.5 per cent.
    In the Atlantic region, vacancy rates increased in both St. John’s (NFLD)
(up 0.6 of a percentage point to 5.1 per cent) and Saint John (NB) (up
1.1 percentage points to 6.8 per cent). The vacancy rate in Halifax edged down
by 0.1 of a percentage point to 3.2 per cent. Slower employment growth,
out-migration, and low mortgage carrying costs have weakened demand for rental
housing and put upward pressure on vacancy rates in Atlantic Canada.
    The highest average monthly rents for two-bedroom apartments in new and
existing structures were in Toronto ($1,067) and Vancouver ($1,045), followed
by Calgary ($960) and Ottawa ($941). The lowest average monthly rents for
two-bedroom apartments in new and existing structures were in Trois-Rivières
($488) and Saguenay ($485).
    By excluding the impact of new structures built since the last survey and
conversions from the calculation, we can get a better indication of the rent
increase in existing structures. The greatest rent increases occurred in
markets where vacancy rates were lowest in 2006. Rents in existing structures
were up 19.5 per cent in Calgary, 9.9 per cent in Edmonton, 5.1 per cent in
Greater Sudbury and 4.4 per cent in Vancouver. Overall, the average rent for
two-bedroom apartments in existing structures across Canada’s 28 major centres
increased by 3.2 per cent between October 2005 and October 2006. Excluding
Calgary and Edmonton, the average rent for two-bedroom apartments in existing
structures was up only 2.4 per cent in 2006 compared to 2005.
    With the release of its 2006 Rental Market Survey, CMHC has broadened its
coverage of the rental market to include apartment condominiums offered for
rent in the following centres: Vancouver, Calgary, Edmonton, Toronto, Ottawa,
Montréal, and Québec. In 2006, vacancy rates for rental condominium apartments
were at or below one per cent in five of the seven centres surveyed. Rental
condominiums in Vancouver and Toronto had the lowest vacancy rate at 0.4 per
cent. On the other hand, Québec and Montréal registered the highest vacancy
rates for condominium apartments at 1.2 per cent and 2.8 per cent in 2006,
respectively. The survey showed that vacancy rates for rental condominium
apartments in 2006 were lower than vacancy rates in the conventional rental
market in all the surveyed centres, except Montréal and Calgary. The highest
average monthly rents for two-bedroom condominium apartments were in Toronto
($1,487), Vancouver ($1,273), and Calgary ($1,257). All surveyed centres
posted average monthly rents for two-bedroom condominium apartments that were
higher than average monthly rents for two-bedroom private apartments in the
conventional rental market in 2006.
    In Toronto, Montreal, and Vancouver, the scope of CMHC’s Rental Market
Survey was further extended to gather information on monthly rents in dwelling
types(2) other than private apartments and condominium apartments such as
duplexes and accessory apartments. The results showed that the average monthly
rent for a two-bedroom unit in the secondary rental market was lower than the
average rent in both the conventional and condominium apartment markets in
Montréal and Vancouver. In Toronto, the average monthly rent for a two-bedroom
unit in the secondary rental market was slightly higher than in the
conventional rental market.
    Starting in 2007, CMHC will be conducting a rental market survey in the
spring, in addition to the one conducted in the fall. The results of the
spring survey will be published in June and will provide centre-level
information on key rental market indicators such as vacancy rates and average
rents.