Winnipeg's apartment vacancy rate has fallen to its lowest level on record -- a scant one per cent -- prompting some officials to label it a crisis.

"It's really at a breaking point right now," Jino Distasio, director of the University of Winnipeg's Institute of Urban Studies, said Thursday. "Provincial and federal authorities need to make a decision on what the strategy should be (for addressing the problem)."

Distasio was commenting after Canada Mortgage and Housing Corp. released its latest annual rental market report for Manitoba. It found Winnipeg's apartment vacancy rate has fallen to one per cent from 1.5 per cent a year ago, which is the lowest it's been since CMHC began tracking vacancy rates in 1988.

And that's the overall rate for the city. In the eight suburban zones it's even less -- 0.7 per cent. In some parts, such as the Assiniboine Park area, it's as low as 0.1 per cent.

And in the northern Manitoba city of Thompson, it's zero -- no vacancies.

The survey also found that in addition to tighter rates, Manitoba renters were also hit with higher rents in 2008. CMHC said the average rent for a two-bedroom apartment in Winnipeg climbed to $769 a month from $740 a year ago, and for all the major urban centres combined it increased by $27 to $748 a month.

The housing agency blamed the declining vacancy rates -- they've been at or below 1.5 per cent for seven of the last eight years -- on an influx of new immigrants into the province in recent years.

"And certainly the demand side of the equation is not going anywhere but up," said Jeff Powell of CMHC. He noted the Manitoba government sponsored 11,000 new immigrants this year and intends to increase that number to 20,000 a year by 2016.

So how bad have things become for some renters?

University of Manitoba Students Union president Jonnie Sopotiuk said he met one student last week who has been looking for an apartment for five months. During that time, he came across only 13 vacancies and all of them were either taken when he called, or the rent was more than he could afford.

"And we've seen that with tons and tons of students that come through our doors," Sopotiuk said. "It's not unusual at all."

Manitoba Society of Seniors president Harry Paine has even heard of some seniors who have been looking for a year or more, without success.

Over at Welcome Place, a non-profit agency that helps federally sponsored refugees get settled, it's become a constant struggle to find decent, affordable housing for its clients.

Hani Al-Ubeady, the agency's housing counsellor, said Welcome Place has been forced to put some clients in houses or apartments "that weren't even suitable for animals" because there was no place else to go.

In other cases, such as the Obeing family from Sudan, it was able to find them a decent, four-bedroom apartment on Spence Street. But the monthly rent of $1,300 is $328 more than the federal housing allowance they receive, so the family of nine has had to make up the difference from their food allowance and scrimping anywhere they can.

Al-Ubeady and Distasio, who both used the word "crisis" to describe the situation, said the obvious solution is to build more rental units. But how do you get developers to do that?

Powell said there have been 2,933 new rental-housing starts in the Winnipeg area in the last five years. While that's a huge improvement from the previous 15 years, when there were none, it's still nowhere near enough given population growth and the loss of rental units to condominium conversions and properties being condemned or otherwise removed from the market.

Developers and groups like the Professional Property Managers Association of Manitoba say the best way to spur development is to do away with provincial rent controls, which limit how much landlords can raise rents each year.

This year's guideline was two per cent and PPMA officials say decades of controls have kept rents for existing properties artificially low.

And since most renters are reluctant to pay the higher rents developers have to charge to cover the cost of building new, few new ones are being built.

Distasio and developer Marlene Spletzer of Crystal Properties Ltd. said the federal and provincial governments need to offer more subsidies to developers to help offset construction costs and keep rents down.

Distasio said governments also need to encourage more innovative approaches, including more mixed-use developments that include low, middle and high-end units.

Spletzer said she'd also like to see the city streamline its approval process to make it faster and easier to get developments approved.

St. James Coun. Scott Fielding, chairman of the property and development committee, agrees civic politicians must go out of their way to approve new residential apartment projects.

murray.mcneill@freepress.mb.ca
barley.kives@freepress.mb.ca

 

Anatomy of Winnipeg's Rental 'crisis'

The circular path toward Winnipeg's acute shortage of rental-apartment units:
 

RENT CONTROL

Provincial restrictions on rent increases place a cap on the potential long-term profits from apartment projects, which deters developers from building new apartment buildings.

HIGH CONSTRUCTION COSTS

Construction inflation averaged around 15 per cent a year during the housing boom that only subsided this fall, making it more expensive for developers to build apartments -- and further diminishing profit margins.

UNCERTAIN APPROVAL PROCESS

Developers interested in building new apartments typically plan large projects because economies of scale allow them to make more money. But large apartment buildings also tend to face more opposition from neighbours, creating uncertainty when developers apply to the city for regulatory changes or building permits. This further discourages the construction of new apartments, developers claim.

MORE IMMIGRANTS AND SENIORS

Increased immigration to Winnipeg has increased the demand for apartments, as recent arrivals typically rent instead of purchase homes, says Canada Housing and Mortgage Corp. At the same time, the aging existing population has increased the pool of seniors who want to move out of their homes and into apartments in the neighbourhoods where they are already living, developers say.

LOW VACANCY RATES

The combination of limited supply and increased demand has driven apartment vacancy down to one per cent in Winnipeg, the CMHC says.

RISING RENT

Ironically, rent in Winnipeg is actually rising as a result of all these factors. The average two-bedroom apartment in the city now rents for $769 a month.