The front page of today’s Star Phoenix says, “Tenants feel the pinch: Heated market driving increases in rental charges.”
The story references the predicament of a Saskatoon woman, Marilyn LePage who faces her third rent increase in the last twelve months. She has written a letter to the city council asking, “What can be done to keep rent increases and frequencies under control for myself and other Saskatoon citizens?”
The answer she received was sure to disappoint as the council made it clear that “rent controls” fall outside of the local jurisdiction. City solicitor Theresa Dust reminded those present of past attempts by the province to place controls on rents and noted that it produced “poor results.”
This is one of the sad realities of a real estate market that is experiencing a growth spurt. It affects almost everyone, and those who don’t own their own a home can be affected the most. They not only move further away from owning a home due to the increased cost of housing, but they inevitably pay the price in higher rental costs as market values increase.
I expect that we’ll hear many more stories like Ms. LePage’s over the coming year. East-side apartment-style condos are now selling in excess of $130,000.An investor who purchases such a unit with 25% down will face carrying costs of over $850 per month not including maintenance or insurance. At present, that same unit has a market rent of about $700.Assuming the unit is occupied every month of the year, the landlord is a couple of thousand dollars shy of covering expenses. They won’t be excited about that for very long.
At the same time, vacancy rates are falling across the city and that trend is expected to continue as more people move back to Saskatoon. Condo conversions will likely remove a number of units from the rental market over the next two years.
Ultimately, rents are subject to the principle of supply and demand just like resale real estate is. More renters and fewer rental units equal higher rent payments. It’s pretty much unavoidable.
I’m always happy to answer your Saskatoon real estate questions.
Norm Fisher
Royal LePage Vidorra