Vacancy rate up, prices remain high for now

For the past few years there have been two shocks newcomers to Estevan experience when they begin looking for accommodation: there are no available rental units and if there are, the monthly price is much too high.

According to the latest figures from the Canada Mortgage and Housing Corporation, the former is no longer the case. There are available rental units, perhaps more than there have been since before 2010. The cost to rent in the Energy City however is still high. It continues to be the highest average rent in Saskatchewan.

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At one time in early 2013 the city was experiencing, effectively, a 0.0 per cent vacancy rate. Estevan was the most difficult place to find accommodation in the province and maybe even the country. Last October, renters found some relief, if not a lot of choice, when the vacancy rate increased to 1.8 per cent. Only Weyburn’s 1.5 per cent vacancy rate was lower at the time.

One year later, and Estevan is suddenly the easiest place in the province to find a rental unit. The vacancy rate was a barely believable 12.5 per cent in October.

While vacancy rates have increased province-wide, no other place in Saskatchewan had a rate above 10 per cent, and North Battleford had the second highest vacancy rate at 9.2 per cent.

Earlier this year Estevan made headlines across the country when the CMHC discovered the average rental price on a two-bedroom apartment here was greater than that in notoriously expensive Toronto, Vancouver and Montreal.

Lynn Chipley, sales representative for Century 21 Real Estate in Estevan, said one contributing factor could very well be the commissioning of the clean-coal project at Boundary Dam Power Station, which went online in October. That project brought hundreds of temporary workers into the community, and by October, there was no more work for them.

“That was the biggest exodus of individuals that we saw,” noted Chipley.

Whether the construction workers themselves were renting or not, that steady decline in employees over the last year would have opened the markets up quite a bit.

With that loss of people and the addition of a 55-unit apartment on Third Street, a city the size of Estevan can experience a vacancy rate jump into the double digits.

“That addition of 55 units was very welcome, but it added more than we probably needed, so right now we have a surplus,” said Chipley. “I don’t think it will last forever. I know it won’t.”

The number of apartment units in the city remains as the lowest total in the province but has increased from 508 to 542 since October 2013. Weyburn has 610 while Yorkton and Swift Current both reportedly have 834 rental units.

“The completion of a major project and subsequent downsizing by some employers contributed to the decline in rental demand,” said the CMHC report, and added, “Further contributing to the increase in vacancy was a number of newly completed condominium apartments this year, which provided the opportunity for many renters to move into homeownership.”

Chipley said everybody can now find a place to stay. The next hurdle is finding an affordable place. Though at some point the vacancy rate should be expected to impact price and begin lowering what people pay for rental units in Estevan, that hasn’t happened yet.

“Now, where landlords are at in terms of what they’re prepared to reduce their rents to – the ones we manage have agreed to soften a little bit – but over time I think it will be absorbed,” said Chipley.

There has been one type of unit that saw a decrease in price in Estevan. While rent for most categories has increased since last October, the average price of bachelor suites is showing a drop from $740 per month to $674.

Two-bedroom units saw a modest 3.3 per cent increase in the past year, now sitting at $1,240 per month, still the most expensive in Saskatchewan, and $14 more per month than Lloydminster.

The biggest change has been reflected in bachelor and one-bedroom suites, with vacancy rate jumps from 4.2 to 33.3 per cent and 4.1 to 16.8 per cent, respectively. Even the vacancy rate of two-bedroom apartments jumped from 0.0 to 8.9 per cent.

Unless the city sees all of the available units called for once again, Chipley said it may take about six months to really see a decrease in rental prices. If it comes to filling a residence or seeing it remain vacant, prices will drop.

“Absolutely, getting 80 per cent of what you were getting before is better than getting zero,” she said. 

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