Great News for Owners and Investors, Bad News for Renters
[EDMONTON, CANADA]
By: Sibernie James
What constitutes great news for Edmonton's condo owners and investors is often unwelcome news for apartment renters.
Many renters are getting squeezed out of their homes as condo conversions charge ahead due to extraordinary demand caused by unprecedented population and economic growth. Projections show that another 83,000 people will be living in Edmonton by 2012.
One of the main reasons for the surge in conversions is profit. It is more profitable for property owners to convert an existing rental property to condos than it is to build new units.
The City of Edmonton reported that there were 4,134 condo conversions in the first five months of 2007 - almost as many as the total number of conversions in 2006. If conversions continue at the same rate, a record number of rental units will be lost this year. Edmonton's rental vacancy rate for 2007 is expected to be about 0.7 per cent.
The soaring rents and conversions of low-income housing into luxury condos are causing more and more apartment renters to turn to shelters or the streets. But that is not always the case. Richard Goatcher, a local CMHC senior market analyst, says that just because an apartment is turned into a condo, the renter is not necessarily evicted.
According to Edmonton's mayor Stephen Mandel, City Hall does not have the authority to halt condo conversions in Edmonton. As long as there's no zoning change requirement, he said the city can't do much. Loopholes in the Alberta government's new rental laws are allowing landlords to get rid of tenants to convert apartments into condos in three months, rather than the promised year. Landlords only have to give one year's notice if they are doing major renovations and need the unit empty. But there's no cap on rent increases, which can drive tenants away, and there's no regulation to prevent a landlord from selling a unit when someone is living there.
The provincial government is getting swamped with phone calls about the issue. It is now trying to sustain a delicate balance between the rights of the tenant and the rights of the property owner.
The mass conversions of apartments to condos might eventually slow down or end. The theory is that as more converted condos flood the market, the increased supply could lower the demand for such units, thus lowering the cost. If condos are less profitable for property owners then there would be less incentive to convert rental units.
Canadian investors and first time home owners are buying the converted condo units so demand for them continues to rise.
Average condo prices climbed to $271,908, in August, up 2.5 per cent from July and up 44 per cent from a year ago.
Genworth's Metropolitan Condominium Outlook report forecasts the Edmonton condo market to average 18.3 per cent this year and 4.1 per cent annually to 2010. By then, the average condo price will be $240,875.
Note: Dollar amounts are stated in Canadian dollars.
By: Sibernie James
What constitutes great news for Edmonton's condo owners and investors is often unwelcome news for apartment renters.
Many renters are getting squeezed out of their homes as condo conversions charge ahead due to extraordinary demand caused by unprecedented population and economic growth. Projections show that another 83,000 people will be living in Edmonton by 2012.
One of the main reasons for the surge in conversions is profit. It is more profitable for property owners to convert an existing rental property to condos than it is to build new units.
The City of Edmonton reported that there were 4,134 condo conversions in the first five months of 2007 - almost as many as the total number of conversions in 2006. If conversions continue at the same rate, a record number of rental units will be lost this year. Edmonton's rental vacancy rate for 2007 is expected to be about 0.7 per cent.
The soaring rents and conversions of low-income housing into luxury condos are causing more and more apartment renters to turn to shelters or the streets. But that is not always the case. Richard Goatcher, a local CMHC senior market analyst, says that just because an apartment is turned into a condo, the renter is not necessarily evicted.
According to Edmonton's mayor Stephen Mandel, City Hall does not have the authority to halt condo conversions in Edmonton. As long as there's no zoning change requirement, he said the city can't do much. Loopholes in the Alberta government's new rental laws are allowing landlords to get rid of tenants to convert apartments into condos in three months, rather than the promised year. Landlords only have to give one year's notice if they are doing major renovations and need the unit empty. But there's no cap on rent increases, which can drive tenants away, and there's no regulation to prevent a landlord from selling a unit when someone is living there.
The provincial government is getting swamped with phone calls about the issue. It is now trying to sustain a delicate balance between the rights of the tenant and the rights of the property owner.
The mass conversions of apartments to condos might eventually slow down or end. The theory is that as more converted condos flood the market, the increased supply could lower the demand for such units, thus lowering the cost. If condos are less profitable for property owners then there would be less incentive to convert rental units.
Canadian investors and first time home owners are buying the converted condo units so demand for them continues to rise.
Average condo prices climbed to $271,908, in August, up 2.5 per cent from July and up 44 per cent from a year ago.
Genworth's Metropolitan Condominium Outlook report forecasts the Edmonton condo market to average 18.3 per cent this year and 4.1 per cent annually to 2010. By then, the average condo price will be $240,875.
Note: Dollar amounts are stated in Canadian dollars.
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