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.
