The Metro Vancouver Housing Corporation is losing many of its moderate-income tenants to the housing market.
With variable mortgage rates going as low as 2.25 percent, plus incentives being offered by sellers, families are buying homes and moving out of affordable rental properties operated by the public housing body, according to a report by regional housing manager Don Littleford.
Although this may be good news for the real-estate industry, Littleford noted in his report—to be received tomorrow (October 23) by the MVHC board—that this is a matter of “growing concern”.
The wholly owned Metro Vancouver subsidiary depends on rentals of its low-end-of-market (LEM) units for most of its revenues, the housing manager stated in the report.
“On a variable rate, if you go back a couple of years ago, if you got four percent or 4.5 percent you’re pretty lucky,” Littleford explained to the Georgia Straight in a phone interview. “With the efforts of the Bank of Canada and the chartered banks to create economic activity, they’re offering very low-cost money on everything.”
In his report, Littleford pointed out that the “next several rental quarters are expected to be challenging until mortgage and consumer-borrowing interest rates return to more normal levels”.
“This will temper housing purchases and tenants will be less likely to leave,” he stated. “However, most economists don’t expect higher rates to come into effect until later in 2010 or early 2011 now, given the strength of the Canadian dollar.”
The MVHC is projected to generate a total of $29.6 million in rents this year, according to the latest budget information, which will also be received by the corporation’s board at the October 23 meeting. This represents about 83 percent of the $35.7 million total revenue expected by the housing body in 2009.
Some 10,000 people are housed in the 53 complexes owned and operated by the MVHC in 11 municipalities across the Lower Mainland.
The housing body has seen two consecutive quarters of increasing vacancy in its properties, with the third quarter of this year posting a rate of 2.96 percent, according to Littleford’s report. He also recalled that as of April 2009, the Canada Mortgage and Housing Corporation pegged the average vacancy rate in purpose-built rental housing across the region at 1.9 percent.
Meanwhile, B.C.’s housing market has shown signs of recovery following a downturn precipitated by the global economic recession.
Figures released on October 15 by the B.C. Real Estate Association showed that residential sales reported through its listing service rose 68 percent, to 8,576 units, in September compared to the same month in 2008.
“Low mortgage interest rates and renewed confidence in real estate assets has propelled B.C. home sales to a level not seen in two years,” BCREA chief economist Cameron Muir stated in a media release. The association reported that September posted the highest number of sales for that month since September 2005 and the third-highest ever recorded for a September.
Buyers snapped up a total of 63,521 units in the three quarters of 2009, representing a six-percent increase from sales in the first nine months of 2008, according to the BCREA.
The same upward trend is reflected in the Lower Mainland. The Real Estate Board of Greater Vancouver reported on October 2 that 3,559 homes were sold in September. This represents a jump of 3.4 percent from the 3,441 sales in August 2009, and a significant 124.5-percent increase compared to September 2008 sales of 1,585 units.
With renting families looking toward home ownership, Metro Vancouver is ramping up efforts to entice new prospective renters.
“In particular this has included selective suite upgrades in hard-to-rent areas; simplifying the LEM application form; extensive advertising on ”˜Craigslist’; and ensuring curb-appeal at all sites,” Littleford stated in his report.
However, the housing manager also noted that “the number of moderate income families within the income restrictions applying for MVHC housing is less than expected.”
Littleford and Metro Vancouver financial officer Jim Rusnak coauthored a separate report to the MVHC board stating that the housing body expects to spend $8.3 million this year on repairs and other expenses to maintain its rental properties. Expenses include “water ingress repairs”, meaning that some buildings have not been spared from the leaky-condo phenomenon that left other homeowners wet in their pockets.