Housing starts were way down in Winnipeg in September, prices were fairly flat and there is much more inventory for sale than usual in the city. But as a testament to the balanced real estate market in Winnipeg, the actual number of sales continued to be brisk.
The housing market is very dynamic with all sorts of different pressure points, but many industry experts agree that one of the factors influencing the Winnipeg market these days is the increasing number of new rental housing units.
Artis REIT has one of the city’s largest apartment buildings under construction, a 40-storey, 400-unit building just south of 360 Main, its Portage and Main office tower. Even though it is about one year behind its original construction schedule due to trade tariffs that disrupted international steel markets, its third-quarter 2021 opening date will likely single-handedly raise the city’s apartment vacancy rate, now sitting at about 2.9 per cent.
Frank Sherlock, executive vice-president of property management with Artis REIT, said, "Vacancy rates are very low in Winnipeg now and will probably continue to stay fairly low. For us, the thinking is, are we going to be able to convince people to live downtown?"
Sherlock is not overconfident about the expectations, but does believe the sentiment is moving towards a more general acceptance of that proposition.
Frank Koch-Schulte, vice-president at Edison Properties, one of the three largest residential property managers in the city, does not believe there is much doubt that’s happening.
"When it comes to downtown, it seems like everyone (is) trying to jump on board the downtown market," he said. "It seems like every large (apartment development) company has something at various stages of development."
Edison Properties — no stranger to the downtown housing rental market, having built and run the 30-year-old Fort Garry Place — is in the process of renovating a former Manitoba Housing building on Smith Street.
"There is definitely a lot going on (in the rental housing development scene)," Koch-Schulte said.
Demand for rentals is definitely up and there are developments across the city, including a significant number of new units near the University of Manitoba’s Fort Garry campus to alleviate a shortage of appropriate student housing.
Koch-Schulte said Winnipeg is becoming more attractive for developers from outside the province.
"It’s a good thing for the average tenant because (an increasing number of units on the market) puts downward pressure on prices," he said. "Winnipeg has been overlooked in the past, but now we see developers from Edmonton and Calgary... who have been forced to look elsewhere for growth."
The steady increase in the number of apartment units coming onto the market is one factor in the steady decline in housing starts in Winnipeg in recent months, according to Canada Mortgage and Housing Corporation (CMHC). With lots of new rental inventory and a backlog of resale homes on the market, homebuilders are dialing it back.
Christian Arkilley, a senior economics analyst with CMHC, said there is strong demand in Winnipeg for rental apartments for a couple of reasons.
"One is affordability," he said. "The other is the increase in the number of international immigrants to Winnipeg. Typically, their first introduction to the housing market is on the rental side."
Peter Squire, vice-president of external relations and market intelligence with the Winnipeg Realtors Association, said the increase in the rental housing option adds to the functionality of what is widely regarded as a very balanced real estate market that Winnipeg currently boasts.
"We had such a shortage of rental housing in the first decade of the century that helped cause double-digit single-family home price increases," he said. "The extra supply of rental has helped to calm the market down considerably. It’s made the market competitive for all property types."
There were 1,211 homes sold in Winnipeg in September — 16 per cent more than last year — but prices were fairly flat.
While there are brisk sales, the actual listings — the number of houses that are on the market — were up 10 per cent.
Squire said there are now enough listings on the market to account for about five months’ worth of sales.
That dynamic is not all about new apartment units on the market, but it is a contributing factor.
According to CMHC, for the year to date, there have been 2,642 new rental units on the market. Last year, there were 3,510 new rental units out of a total of 5,384 housing starts in Winnipeg.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.