One chart that says it all
Housing crisis is getting more intense
Last night, I gave a presentation on “Why Alberta Now”.
I included charts, data, news snippets to show the attendees on what I’m tracking and where I think the Alberta market is going.
We discussed the housing crisis that’s going on across Canada and how it impacts future real estate rent / prices.
This chart captures the intensity of the housing crisis:
Here’s the edited transcript from the call:
Look at vacancy rate plummeting across the board. Other than Nova Scotia and PEI, we're talking about 0.8% to 1.1%, 1% to 1.1%, that's basically a rounding error, I'm not going to pay attention to that.
But every single Province except these two are seeing a drop in vacancy. If you look closely at it, it's not just about the drop, it’s how much it dropped by.
In Newfoundland, that's significant. Manitoba, also pretty significant.
Alberta and Saskatchewan are the most significant because of the degree of how much it dropped.
Look at the vacancy rate in Alberta to go from 3.8% down to 2.1%, and Saskatchewan 4.2% to 2.4%.
We're starting to approach a vacancy that’s similar to the Ontario numbers.
For those of us who are living in Alberta, we haven’t experienced this level of vacancy as compared to people who lives out East or lives in Vancouver.
We’ve read articles or seen news on TV of tenants looking for a place to rent, showing up with a year worth of rent just so they can secure a place to rent.
Or when there are people line up around the block to look for a place.
We haven't really seen that phenomenon here in Alberta for at least the past 15 years. Mark my word, it's coming here to Alberta. You're going to start seeing that on the news, around your neighborhood.
This is going to start happening, because, it’s just data.
Once the vacancy rate reaches about 1%, you'll start seeing people who become pretty intense, because they're desperately needing to find a place, unfortunately.
If they don't grab the place that pop up on the market, they're not going to find a place.
Consider this:
Imagine you show up to travel destination, say Disneyland, or Banff National Park. Normally you would expect to find a hotel room close by, you weren’t worried about finding a place to stay.
Except, you show up and find that every single hotels are booked.
You keep driving and driving, until you saw the sign “vacancy” displayed on one of the hotels in the distance.
As you get closer, you noticed how many other people are also lined up, looking for a room to stay for the night.
That's what's happening now with a 1% vacancy rate.
At 1% vacancy rate for apartments, it's not like people would have any luxury to wait and look around. If they don’t take the place, the next option would be hotel or motel rooms.
On the flip side of this housing crisis, this create a tremendous opportunity for real estate investors to provide more housing for the renters.
What’s a “normal” experience for Torontonian and Vancouverite tenants will soon become the new normal for Albertan tenants.
This is the one chart that says it all.
What’s your thoughts on the housing crisis? Reply to this email to let us know.
Eric Chang
Calgary, AB
July 9, 2024
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