Falling rents

[kansai_92]

This is courtesy of Prompton.
I took their leasing availability from February and compared with March.
The March prices are in bold. Many units have dropped asking rents, in some cases as much as $350.

Sorry for using picture instead. I couldn't figure out how to post in HTML.

[littlevanrenter]

I can concur with this. I've been watching Craigslist for the past 2 months and while yes, CL is generally overpriced - about everyone uses it.

Prompton is still overpriced here though. There are ads for Cooper's Point asking $1400 for 1 bedroom and still not taken.
Right now, I would say $1300 for downtown is the going rate you will probably rent it out at. Anymore and you should have a pretty good reason to being charging that (square footage, amenities etc) and this would be for brand new. This is of course for those who are comfortable with paying $1300 for a small 1 bedroom which I don't think there are many left... most of these will be occupied by a couple (who haven't been brainwashed into buying...) or ESL students (1 in the living room etc)

Buildings recently cropping up in units:

- Yaletown Park always seems to have a revolving door
- Cooper's Point, Lookout, Mariner
- Spectrum is also a revolving door
- Crossroads is just coming on line
- People were doing walk-throughs on Espana (2 towers)
- Walk-throughs should be pretty soon on TV Towers (2 Towers)
- Woodwards!!!!

Couple places in the West End have renovated which is not bad... but lack parking, in suite laundry so they can't compete as well given the available supply.

Anyways...

[kansai_92]

Properties that aren't renting out and haven't dropped in asking rent are still sitting.
I'll try to run this analysis again next month and see what happens.

Sometimes owners get high rents if they relax their screening standards.
Case in point, I've had prospective tenants who have money to pay, but they have no verifiable income and little to no credit history.
They also want to pay in cash, but I took a pass on their application.
Instead I dropped my rents $100 and found a working couple with a two kids.

[islandlandlord]

Properties that aren't renting out and haven't dropped in asking rent are still sitting.
I'll try to run this analysis again next month and see what happens.

Sometimes owners get high rents if they relax their screening standards.
Case in point, I've had prospective tenants who have money to pay, but they have no verifiable income and little to no credit history.
They also want to pay in cash, but I took a pass on their application.
Instead I dropped my rents $100 and found a working couple with a two kids.

Same situation over here on the island. Rents are beginning to creep down, with units staying empty longer. Anyone who has a barebones cash flow might begin to get into some trouble.

Good post kansai.

[littlevanrenter]

Also - and I mentioned this in another topic - sorry for the repeat

The 2 bedroom place I rented downtown for $1800 all last year has dropped $50... no takers. They have had 1 person showings twice a week for the past 3 weeks (so 6 showings/1 person at a time) - no takers and its in excellent shape condition wise...

Pure, Musee are also on line with available units as well the one up on 13th (he posts about every hour for both 2 bedrooms ($2300) and 1 bedrooms ($1600 though now is giving 1 month free rent (so $1500 a month) - no takers

And then there's the Rise still - $1800 for 1 bedroom... whatever...

[Near7]

yea totally. I manged to rent a 2br+den asking $1650 for $1300. Not bad at all eh.

[markx]

Very interesting. In the US, dropping rents occured quite late in the housing crash, after the subprime crisis, before the mortgage giants fall. I guess Vancouver's economy is so dominated by RE that a slowdown in RE puts immense pressure on real world employment, which translate to pressure on rents.

So much for zero vacancy.

[RJB]

I saw a two bedroom in a smaller brick building in the West End renting for $1150. Snapped up in two days!

[markx]

I saw a two bedroom in a smaller brick building in the West End renting for $1150. Snapped up in two days!

The fact that a two bedroom in the West End somehow got priced at $1150, and stayed two days on the market, should be an indication that rents are dropping. Non-basement two bedrooms in Surrey probably fetch that much last year.

[Strataman]

So much for zero vacancy.

I was at a meeting with one of the largest Property Man firms in Yaletown today. The PMs agreed that in general new condo's under 10 years old have dropped 10 to 15% in the last two months! Vacancy rate for this firm is 30 % many are available NOW which means no rental income at all is coming in. They handle 12,000 units.

[littlevanrenter]

I think some of the problem here is that the private owner doesn't bother to check out what the market is doing - ie, actually browse Craigslist to see the amount of rentals and prices - they just blindly keep posting - over and over. Property Management companies at least keep stats - but again, because they're providing a service - that cost is pushed into the rental making it higher.

People keep getting that absurd 0% vacancy rate report in the MSM and just repeat the mantra. Vacancy is not at 0% - its anything but and that needs to get reported properly by the MSM.

While I was shopping - I ended up in a building just opening up and had almost all floors of 26 going for rent. They were all competing with each other but had no clue how much each were charging... unfortunately for me, I couldn't get a bidding war going because the building was new and the owners hadn't suffered the months of vacancy that they will. Have to see next year

[littlevanrenter]

Darn - keep forgetting

There are many rentals that are being offered to end around January - so the owner can try and rent out for the Olympics - I think there are a lot of owners holding out for the bonanza that they think the Olympics are bringing... too bad it won't - its the Winter Olympics! People in Norway are not going to be coming to Vancouver for it and Asian countries don't care!

[BCAccountant]

I don't think it's falling rents, maybe it's people buying into the RE market in the last few years, but a lot of the rental schedules I have preparing this tax season show a lot more months of vacancies and a lot more operating losses than usual.

Also, the poor suckers that bought rental properties in late 2007 and in 2008 are now reporting their second year of losses and are 1/4 into their third year with no end in sight. Their interest expense alone in some cases is higher than the rent they are bringing in and I wonder what lower rents are going to do to them. I don't believe they can hold on forever, eventually they will have to unload the property just to stop losing cash on a monthly basis. Not to mention the drop in RE value that they thought was a sure thing.

[Prestonfan]

Great post, Kansai_92.

[yogurt]

Also, the poor suckers that bought rental properties in late 2007 and in 2008 are now reporting their second year of losses and are 1/4 into their third year with no end in sight. Their interest expense alone in some cases is higher than the rent they are bringing in

Some? I would think all, unless they had a whopper of a down payment.