With the recent spike in home property assessments, the microscope has been squarely on the residential real estate market.
Mark Goodman, publisher of the rental market focused Goodman Report, says the frenzy has hit there too.
Goodman says rental building sales jumped more than 40% in 2015, worth a whopping $1.5-billion – up more than 90-percent.
But Goodman says the real increases are coming at unit turnover.
“We have clients who own high rises in the west end where the rents for a 1 bedroom were $1,200 or $1,300. And just on a turnover, without even renovating the suite they’re getting close to $2000. So These are massive jumps.”
He says he’s seen jumps of up to 100%, though the average is in the 10-20% range.
He says part of the problem is supply and demand, with vacancy rates for the region hovering at 0.8% and for Vancouver at 0.6%, there’s a squeeze.
At the same time, owners are paying more for the buildings.
“A few years ago we’d have maybe three or four offers in a couple of weeks. Now we’re getting maybe 15-20 people showing up to tour the building within 48 hours, and multiple offers over the ask price.”
As the city’s affordability problem increases, people are looking elsewhere, and the demand for rentals out of the city centre is growing.
Goodman says that’s being met with rising rents outside of the core.
“Investors are now seeing this shift in the city where people just can’t afford to live in the city – forget about buying, but event renting… The rents are actually going up faster than they are in the Vancouver area, for example in the Metrotown area of Burnaby which is a really hot area.”
Goodman says with more transit options opening up for commuters, the pressure is likely to mount even higher.
With the region’s vacancy rate so low, there’s no doubt that more rental units are needed. How to get there remains a contentious problem.
A slew of incentives in Metro Vancouver’s regional housing strategy have produced some results with about 3,000 new units being built per year now, up from 560 in 2008.
And in Vancouver, the city’s Rental 100 program, which offers developers incentives to build rental-specific buildings has had some success, producing about 1,300 units last year.
But it’s not enough. Vancouver Councillor Geoff Meggs says the city need at least 5,000 a year, while Metro Vancouver’s Metro 2040 forecast calls for about 6,500 rental units a year.
The region projects a gap between the supply and demand of units of at least 1,600 units – and of about 6,800 units affordable to people earning less than $50,000.