Sudbury rental housing vacancies at all-time low

Low-income households in Sudbury, Ont., are the most impacted by historic low vacancy rates, according to Canada Mortgage and Housing Corporation's (CMHC) 2023 annual report.

In Greater Sudbury, the vacancy rate is holding at its 10-year low of 2.3 per cent. An average two-bedroom unit costs $1,254 per month, and those rates are "stable," thanks to lower student demand for housing offsetting the pressures of increased immigration.

CMHC analyst Tad Mangwengwende said low-income households are facing the highest pressures, mainly because people across all income levels are competing for that supply of housing.

"If you have a low income to begin with, what part of that already tight universe do you really have access to?" said Mangwengwende. "There's a need to then really have a concerted focus on this supply of units that are accessible to our lower income households."

CMHC releases an annual report on the state of rental housing in cities across Canada.

The latest report shows the average two-bedroom rent is $1,258 per month nationally, or just slightly above Sudbury. However, while Sudbury's average rental prices have remained relatively stable, this year's national average is up 5.6 per cent from last year.

Supply and demand a 'conundrum'

Sudbury's low vacancy rate is a product of ever-increasing demand, while rents aren't high enough to justify new construction costs, according to Paul Zulich,executive director of property management company Zulich Enterprises.

He said as Sudbury's economy continues to grow and housing pressures push rents skyward, developers may become more enticed to build. This would only happen with "substantially higher" rents, said Zulich.

But to get more people into jobs in the north, adequate and affordable housing must be available, something Zulich called "a conundrum." Mangwengwende said when cities plan to grow their economies, housing cannot be overlooked.

"We need to plug gaps to ensure that the economy grows. But to plug those gaps, we need to have the housing that allows the people who plug those gaps to be accommodated."

Sudbury has brought in additional workers through the Rural and Northern Immigration Pilot (RNIP), but this has also changed the demand outlook for housing. Whereas students and workers have traditionally gravitated toward one-bedroom units, people taking part in RNIP are more likely to immigrate with families.

This has meant an easing of vacancy rates for one-bedroom housing, while two- and three-bedroom units have faced tightening. Mangwengwende said he expected that trend would continue.

"The growth trajectory of Sudbury and the needs of Sudbury also dictate where the pressures are going to be most evident," he said.

Sudbury's population has increased by roughly three per cent since 2016, according to the CMHC report.

High interest rates hit rental market

The higher interest rates currently in effect in Canada have put strain on the rental market, said Zulich and Mangwengwende. With first-time homebuying becoming too expensive for many budgets, people who would otherwise look at ownership are getting stuck in the rental market, according to the report.

But it also means people who wish to change to different rental housing may have a harder time, if they are lower on the income scale.

"The average two-bedroom rent is not affordable for the two lowest income quintiles. Additionally it's only affordable for some of the households in the third quintile," the CMHC report said.

Of note for Sudbury's rental market is a tiny difference between vacant and occupied rental prices. Often in cities with low vacancy rates, unrented units command a much higher rate. Windsor, for instance, sees a 20 per cent difference between the two categories.

Thatwould normally make it harder for renters seeking new housing, but it is not presently a factor in Sudbury.

Zulich said a more appealing way of building new housing units was transforming existing commercial buildings, such as schools or office towers, into housing. He said there may be opportunities for such projects in Sudbury and that his group is "always" looking at potential conversions.

Zulich declined to say which buildings were most of interest to him.