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2013-12-12 at 11:47

Vacancy rate rises

By Leith Dunick, tbnewswatch.com
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A slowdown in the mining economy is one factor playing a role in Thunder Bay’s apartment vacancy rate more than doubling in a year.

Warren Philp, a senior market analyst with Canada Mortgage and Housing Corporation, said the movement of seniors from rental units to retirement complexes could be another reason.

The vacancy rate jumped from 1.1 per cent in October 2012 to 2.6 per cent in 2013.

The statistics only include units with three or more dwellings, and don’t factor in things like basement apartments and duplexes.

“I’m not sure that it represents a trend toward increasing vacancy rates, but it is interesting to observe that vacancy rates did go up over the last year,” Philp said on Thursday.

The 2.6 per cent rate is the highest since 2007, when vacancies hit 3.8 per cent, the start of the downward spiral after reaching a high of 9.3 per cent in 1998.

Philp said there are plenty of factors at play.

First and foremost, he said, the conditions for home ownership have been good. People living in apartments have been looking for homes to buy and leaving the rental market ahead of a perceived increase in mortgage rates.

“Maybe they were sitting with locked in mortgage rates with banks that they’d been dealing with that had a timeframe associated with it,” Philp said.

“We did see increased activity in the resale market in the third quarter, and that may have been people moving from rentals to home ownership, thereby freeing rental units and causing partly the vacancy rate to increase.”

The economy has a lot to do with the change too, he added. Even though it’s grown about 1.1 per cent over the past year, the mining sector has softened with lower commodity prices and undoubtedly isn’t doing as well as it once was.

“With that people involved with the mining industry, whether exploration sites, existing mine sites, people involved with mining supply and service in one degree or another, may not be occupying rental units in the Thunder Bay market as a base, as highly or as much as they were occupying them in 2012, freeing up some rental units there,” Philp said.

Vacancy rates increased in both the north and south side of the city, though the former saw a larger growth in open units, from 0.8 per cent to 2.1 per cent.

An increased supply of unoccupied units hasn’t stopped landlords from raising prices. On average, a two-bedroom monthly rent increased 4.6 per cent over the past year.

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Comments

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jacktb says:
Landlord raising rents will soon find they have no choice but to lower rent rates. Too high in a good market but in a poor market they force renters to buy instead. 1200 new housing units come on the market in a year, condo's, complexes and senior housing freeing up more rental units. If you bought a house in the last 3 years, expect your mortgage renewal to be more than the value of your house. Prepare to pay up on reduced equity in your homes before renewing a mortgage.
Housing prices fluctuate for a number of reasons, interest rates expected to double next year, baby boomers become seniors putting more family homes on the market, more real estate inventory due to new builds and the mining boom and bust cycle that Thunder Bay bought into.
12/12/2013 12:20:19 PM
bttnk says:
Jack - Tbay rated one of the 3 most affordable cities in Canada. Exactly what factual data are you using to suggest a housing crash. Interest rates expected to double? On what planet? That would be economic suicide for the bank of canada. The Thunder Bay market saw a rather dramatic (for Tbay) increase in value because for years it had been comparatively undervalued for a city of its size. This wasn't a boom, it was pricing correction. In addition, when investors are able to see an ROI in excess of 15% on real estate invesment in the city, they are looking to this market as an option. I am seeing people from coast to coast that are investing in this market.
12/12/2013 2:11:29 PM
DougMyers says:
This is of course based on your expert opinion?

This also disregards the fact that Thunder Bay homes are still well below the National average for a city it's size.

Your premise is flawed in that all these new homes that are being built are still selling as fast as they can build them. Home prices will not drop as long as people are buying.

Finally the increases we have been seeing have little to due with mining speculation and more to do with the changing economics of the city.
12/12/2013 2:53:24 PM
progress now says:
There is more at play than the size of the city.

As far as economics go, the signals are at best mixed. Locally, we can't imagine a community without Bombardier or Resolute, but it can happen. If Sears went, and it could, we would be a city of Walmarts and Targets ...not indicators of a prosperous community.

People who give us our credit rating tell us time and again of the importance of Federal and Provincial help to our economic sustainability. Indeed, much of our construction is funded with senior assistance - and stimulus programs.

If our expectations are to match reality we should be cautious. Housing bubbles have served no country well, and we see one ending in Canada in the near term.

Humility, not hype will serve us best moving forward.

12/12/2013 5:19:28 PM
DougMyers says:
I would agree with you but Jacks comments were total fear mongering with no basis in reality.
12/13/2013 9:44:58 AM
mikethunderbay says:
Interest rates are not expected to double next year. That was the concern in the summer, however that fear has subsided and the rates are expected to remain relatively unchanged over the next year because while the economy is growing, it is not growing at the rate expected.
12/12/2013 3:18:26 PM
n00n says:
@jacktb

Jack has no idea what he's writing about. Alot of people just can't 'get their heads' around why Thunder Bay would be a great place to purchase a home, rent an apartment, or live with a family.

It's the old adage 'Those who have knowledge, don't predict. Those who predict, don't have knowledge.'...good luck Jack.
12/12/2013 5:16:16 PM
progress now says:
What one person finds attractive in a community another may not.

Many people can and do pay the price for better weather, interesting, walkable neighbourhoods to live in, not to mention better dining, entertaining, cultural and retail opportunities. Professionals once educated will likely live somewhere else.

Don't forget costs are high but wages are higher elsewhere as well. A Thunder Bay law clerk can easily triple their income in Toronto as an example with opportunities for advancement unavailable in this community.

I like Thunder Bay too, but we must be realistic about its wow power. Only then can we be practical about what it will take to build the city people with want to "live, work and play" in from across the land.



12/12/2013 5:34:29 PM
n00n says:
I agree that what a person finds attractive in a community is totally subjective. However, our City is still extremely attractive for people who are looking to own a good house in a safe neighborhood or come for a quality education with obtainable rental options.

A law clerk may triple their salary (although I don't think that's the case) but what will the cost of living be? Vancouver - 10 times more? Toronto - 7 times more?

I own quite a few rental properties in Thunder Bay and I can assure you that the 'upper' class rentals are still a very easy sell for me. On another note, out of my 50 or so tenants, very few of them have anything to do with mining.

I love 'analysts'...they use/say the word 'could' so much it deems their analysis useless.
12/13/2013 12:22:50 PM
progress now says:
You say:

"...I love 'analysts'...they use/say the word 'could' so much it deems their analysis useless."

I couldn't agree with you more.

Take a look at the limitations in the consultants reports for Prince Arthurs Landing and the Event Centre. These very expensive consultants don't put their reputations on the line at all.

What it means is we have to evaluate everything for ourselves and not let bureaucrats or vested interests make our minds up for us.

Again, I couldn't agree with you more.
12/13/2013 7:12:25 PM
Jeannied says:
My best friends just came from living in Toronto in high park, renting a two bedroom for $1000 all inclusive (excellent area). Only paid for their phones and here the same two bedrooms are going for upwards of $1000 per month in less desirable areas with utilities extra. Wages here aren't great, what is the draw for people to stay here? I feel terrible for people who need to rent because the places available are just too expensive.
12/15/2013 4:01:10 PM
tbfriend says:
jacktb-do you really think house prices will be less then the renewal of mortgage rates? Yes, houses are expensive now-but they are expensive to build too. We were fortunate in TB that our housing prices were way below the national averages for years. Gone are the days when you could buy a northwood bungalow for $160K - they are now $260K. A lot of people think thats crazy - but try to build that same house for $260K - you can't. The cost of material and labour will run you $260K. For rental units - they are expensive to own and operate. It costs $450K to build a 4PLEX - there has to be some return on that. Anyhow, the prices are justified - I don't think the markets will tank because the prices we are seeing represents the true cost of things. I don't know what you do for a living, but I've build many homes, and I own a few apartment buildings. There are true costs to doing either. The only time you'll see houses substantially drop is if we get into an Ignace situation.
12/12/2013 3:27:16 PM
cm punk says:
Actually tbfriend, bungalow, depending on the area are going for 320k or more.
To build a house now is close to $200 a sq ft.
So multiply that by say 1300 plus 80k for the lot and landscape and exterior costs for brick are at 40k.
12/12/2013 3:46:51 PM
Miles August says:
If you paid 320k plus, for a northwood bungalow you paid waaaaaaaayyyyyy too much!
12/12/2013 11:33:42 PM
DougMyers says:
Cm punk

Totally out of touch with reality.

If you paid $400 000 for a 1300 foot bungalow then you get screwed,

12/12/2013 6:02:34 PM
tsb says:
A 1,300 sqft bungalow would take up most of its lot... I'm not sure if you're even allowed to cover 1,300sqft of a 30 foot lot with a house's footprint. But considering new houses in the suburbs are in the 2,000sqft range and going for 400,000 each, his numbers are a bit high.
12/12/2013 7:43:17 PM
cm punk says:
Actually Myers I am anything but screwed.
I own a 3000 sq ft custom built home and pay $9200 a year in taxes.
And I don't live in river terrible terrace
12/12/2013 8:19:23 PM
pylon says:
Me too. Wait no I'd never pay 9200 a year in taxes because I'm smarter than that.
12/13/2013 1:22:42 AM
tsb says:
By your math, you paid $720,000 for your house, but according to your taxes, it's only been appraised at about $470,000.

What did you do to it to make it worth so little?
12/13/2013 7:04:05 AM
DougMyers says:
No you are changing the subject matter.
You stated earlier that a 1300 foot bungalo would sell for $320 000.
If that is what happened then yes someone got screwed.

If you own a 3000sq foot house in the city limits then your taxes are about right, that house is huge. You are living in the lap of luxury.

Back to your original arguement, a 1300 sq ft bungalo would not sell for $320 000.
12/13/2013 9:43:39 AM
unknowncronik says:
dan cm punk,

I have a 3600 sq ft custom built home that only costs me $8000 a year in taxes?

yer gettin screwed!
12/13/2013 10:19:33 AM
tbaybmkr says:
IMHO I think we have a vacancy is that either people are leaving the province for work (I know quite a few) or they are losing their homes... A lot of people are living on the streets, they came from somewhere...
12/12/2013 8:21:10 PM
hotdog says:
live within your means and all is good.
12/12/2013 8:55:57 PM
bubba says:
The old rule of 30%. Principle, interest and taxes of your yearly income. Do the math and go 20% you should be ok. The cars and toys must be paid from the rest. Food really matters!
12/12/2013 9:00:16 PM
nvjgu says:
Mr Hobb's what's this. A slow down in mineing.
12/13/2013 3:55:41 AM
CM Punk says:
You talk like Northwood is the "to be" area.
Hardly, hungalows in Dawson Heights that are 25 years old plus are going for over 300k.

You people do not understand. I know of five homes that were listed for btwn 260-280k and they all more then 5 offers and the sellers got more then 30k asking.

And, a 55 x 120 ft lot in Tuscany estates is selling right now for 73k.
Even if a house cost $260k to build, you need a lot and they are not cheap.
Please get your numbers straight or ask a local contractor.
12/13/2013 9:09:59 AM
bellamente says:
This isn't even about house prices, but whatever. The cost to rent an apartment has skyrocketed. If I wasn't in my current location for so long, I'm sure I wouldn't be able to afford to rent a place. I'm not sure how $1200 for a 1 or 2 bedroom place is considered affordable. But hey, what do I know? I just rent...
12/13/2013 12:17:28 PM
jimmyboy says:
So what astounding effect will this have on the present 1,600 on the waiting list for actual affordable housing....Nothing At All...nor will it drastically be of any positive for the increasing number of those who are totally homeless...and its not like what I have stated is something new...its been a growing sad scenario for a number of years here in the city.!!!
12/14/2013 4:15:17 PM
The Badger Mountain Hermit says:
Check out rental prices in places like Brantford. Thunder Bay rentals are mostly filthy over-priced slums by comparison. Yes, I will eventually move there, one happy day soon.
12/17/2013 5:36:28 PM
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