A rental market survey shows that 38 per cent of rental units in Calgary turned over last year and the top reason for people leaving their units was for home ownership.

The survey, conducted by Canada Mortgage and Housing Corp. for the Calgary Apartment Association, said the next two top reasons were job relocation and financial constraints resulting from increases in rent.

The survey surprised the group which represents many residential rental landlords in the city, said Gerry Baxter, executive director of the Calgary Apartment Association.

“Given the state of the market last year and all of the feedback that certainly seemed to be public at that time, it suggested people were finding rents too high and difficult and they were moving on because of that,” said

Baxter. “But this document and survey puts that to rest as a myth. It wasn’t the No. 1 reason as some people would have had us believe, but rather it ranked third overall.”

A rental market report by the CMHC earlier this year indicated the city’s vacancy rate was two per cent. It was at a record low of 0.5 per cent in 2006.

At an average cost of $1,096 per month, Calgary was the most expensive major city in the country to rent a two-bedroom unit earlier this year.

Previous surveys for turnover rates in the Calgary rental market were 33 per cent in 2004, 36 per cent in 2005 and 41 per cent in 2006, according to the CMHC. And for each of those three years, the top two reasons for people moving out of their rental units were homeownership and job relocation.

“We hear about vacancy rate all the time and vacancy rate is simply a snapshot in time. Today, this many units sit vacant or perhaps are coming vacant at the end of the month,” said Baxter. “This survey tells you how much movement there is within the industry.

“So if you take that 38 per cent over the period of a year, for example, and if you use 38 per cent based on the total number of units that our members tell us they have, which is about 50,000 . . . you can see there’s a significant number of units that actually come available during the course of a year. It tells me there are lots of units for rent in this city.”

Baxter said what he’s hearing from apartment association members is the vacancy rate is closer to three to four per cent.

The latest survey of the turnover rate in rental units is fairly consistent with past surveys, said Lai Sing Louie, senior market analyst in Calgary for the CMHC.

“In a building you can expect about four of those tenants to be gone by year end. So there’s a flow of people coming to the city, moving into rental units,” he said.

“The primary reason for the turnover is that people have moved to buy a house. You buy a house, you’ve got to move. People who are working and they’ve been relocated, you move because sometimes the commute is more than you want to make. Sometimes it’s not even practical so you move, you leave that rental unit. Those are the primary reasons for turnover.”

The most recent CMHC turnover survey was sent to members of the Calgary Apartment Association. Responses were received from 49 building managers, accounting for 8,027 apartment units across Calgary. Unit sizes ranged from bachelor apartments to three-bedroom suites.

Out of the 8,027 units, managers reported about 3,027 turned over in 2007.

Louie said the CMHC does not have data from other cities to compare with the Calgary numbers.

He said it makes sense that home ownership tops the list of reasons for people moving out of rental apartments.

“The first thing when people leave their homes and start off in life they rent a place,” said Louie. “As soon as they can save enough money, they buy themselves a condo or a home.”

Baxter said the tight rental market in the city began changing in about July 2007 when the vacancy rate began to increase and the market has been softening since then.

The Chinook area had the highest turnover rate of 49 per cent followed by the downtown core at 47 per cent, the Fish Creek area at 43 per cent and the northeast at 41 per cent.

The lowest turnover rate was in the North Hill zone at 21 per cent followed by the southeast at 25 per cent and Beltline-Mount Royal at 27 per cent.

mtoneguzzi@theherald.canwest.com

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Calgary CMA Rental Market

Avg. rent/month* Vacancy rate
2008 Forecast $1,140 2.5 %
2007 $1,089 1.5 %
2006 $960 0.5 %
2005 $808 1.6 %

* Average rent for two-bedroom unit Source: Canada Mortgage and Housing Corporation.