Vancouver’s super-low rental vacancy rate is luring baby-boomer-aged owners of single-family homes into investing in the booming multi-family residential market, according to an industry expert.
Avison Young principal Rob Greer said that he is frequently seeing older owners of detached homes, which are now worth millions, selling their houses and investing in small apartment blocks.
“We get calls from such buyers every time we have a [rental apartment] listing,” he told REW.ca’s sister publication Western Investor.
With the average Vancouver West Side detached house selling for $2.7 million, house owners can sell up, buy a suburban apartment building, reserve the best suite for themselves to live in, “and then draw rent from five or 10 other suites, perhaps as retirement income,” Greer said. There is also a potential windfall profit from appreciation.
As well, with Metro Vancouver’s 0.8 per cent rental vacancy rate – the lowest in Canada – and with many tenants priced out of home buying, landlords are virtually guaranteed full vacancies, he added.
At the same time, soaring land prices have fundamentally changed the local multi-family market, according to Greer. The stunning prices have convinced a slew of vendors to sell up to this new breed of private investor, he said. Families who have held rental properties for decades are now cashing out at what they perceive as peak values.
“They never thought they would see prices like these,” Greer added.
In the first half of this year, 26 rental buildings in BC, each worth more than $5 million, sold for an average of $173,630 per door. In Vancouver, the per-suite prices are often twice the provincial average.
Metro Vancouver rental apartment sales are forecast to top $1 billion this year for the first time, estimated local real estate agent Mark Goodman, a multi-family specialist with HQ Commercial of Vancouver. Next year will likely be higher, he said.