More on Condo Conversions

With more condo coversions entering the market, it is much more difficult to determine supply.

Here is a article from Edmonton:


Mondo Condo While Edmonton's population booms, 1,000 apartments a year are lost to condominium conversions Duncan Thorne
The Edmonton Journal Sunday, March 04, 2007
CREDIT: Rick Macwilliam, The Journal, File

In new construction, developers overwhelmingly favour condo projects, like this tower on 104th Street north of Jasper Avenue, over apartments.

EDMONTON - Barbara Hagensen remembers scrambling to find an apartment when she arrived in Edmonton during the boom of the early 1980s. More than 25 years later, the city and province are booming again. But her 1981 search was a cakewalk compared to the task she may now face -- finding a new, affordable apartment in a city that has fewer places to rent now than it did 20 years ago. According to statistics gathered by Canada Mortgage and Housing Corp. (CMHC), there were about 79,600 rental units in the region in 1987. Last year, there were 5,050 fewer, a drop of 6.3 per cent. Most of the original units were turned into condos. The company that owns Hagensen's current apartment, one of 504 units in Strathearn Heights Apartments, just outside downtown, has given notice it plans to tear the complex down and put up condos. "I am really concerned about my neighbours who are on fixed income," Hagensen says. The problem is unlikely to get better any time soon. "Throughout most of the past 20 years the (rental) universe has been declining because of condo conversions," says Richard Goatcher, senior market analyst at CMHC. "What we've seen is that around 1,000 units a year have been leaving the universe to become condominium properties over the last couple of years." Between 1987 and 2006, the region's population soared by almost 233,000, or 29 per cent, to more than a million people. That obviously boosts demand for rentals. There is a little apartment construction to make up for those lost to conversion. Last year, for instance, work began on about 270 units. Overwhelmingly, developers concentrate on building condos. They built more than 5,600 units in 2006. "Our rental inventory has just gone downhill," says Clarence Rusnell, past president of the Edmonton Apartment Association. The city has earmarked $25 million over five years, under its Cornerstones program, to help developers provide 2,500 affordable units. That's 500 units a year -- not enough to make up for conversions to condos, officials say. Coun. Michael Phair, who handles council's housing responsibilities, says the city can do nothing to stem the conversion flood. Provincial law entitles building owners to convert. The city provided incentives for new housing downtown in the late 1990s so more people would live there. Phair says he and others on council expected most of the units would be rentals. "What has happened to many apartment buildings in the downtown is they've become condos, or they were built as condos," Phair says. Across the city, apartment towers and townhouses were the first rental units to be converted to condos. These days, the owners of humbler walk-ups are dressing up their apartments for the condo market. Near Old Strathcona, apartments that have long been popular with university students are for sale. Typical of the trend in the area, a one-bedroom basement suite was recently for sale at $169,900. The owner of a "cosy" one-bedroom within walking distance of Old Strathcona has been asking $177,900. An up-market, one-bedroom in Garneau has been available for $485,900. City-wide, the Edmonton Real Estate Board reports that the average condo price in January was $233,175, up 74 per cent in 12 months. At CMHC, Goatcher says the rental supply is shrinking even though some condo buyers are investors who then rent their suites. The agency is getting reports of some condo owners boosting rents by up to 50 per cent, to cover the soaring cost of buying the units, he says. "The cost of a 1,000-square-foot, new, two-bedroom condominium concrete highrise is rapidly moving towards $500,000 in this city," Goatcher says. "That's Vancouver prices." CMHC started the year by predicting rent increases of 10 to 15 per cent. Goatcher says January increases have prompted it to raise the forecast for the year to 20 per cent. Monthly rents averaged $727 last year, according to CMHC. The average for a two-bedroom was $808. Jim Gurnett, executive director of the Edmonton Mennonite Centre for Newcomers, says few apartments in that price range are available to would-be renters. "If you don't have $1,000 a month to spend on rent, there's really nothing in this town. Our staff cannot find places for people to live." Even $1,000 a month is too low to encourage apartment construction, the apartment association's Rusnell says. Costs are such that a developer would have to charge about $1,700 a month to build an apartment of the quality renting for less than $900, he says. David Kent, president of Nearctic, the developer of the condo plan for Strath-earn Heights, where Hagensen lives, contends council triggered the condo conversion phenomenon in the 1980s. It set property taxes significantly higher on apartments than on individually owned units. Many apartment landlords changed to a condo ownership structure back then, although they did not sell the units immediately, Kent says. Rev. Christopher New, pastor of the Edmonton Moravian Church in Old Strathcona, says developers and tenants often have a different sense of affordability. New, who is also a leader of the Greater Edmonton Alliance, offers a glimmer of hope that there's a way of reaching an acceptable compromise. The church-based GEA works to get both sides talking. In his experience, developers are open to changing plans in ways that work for tenants. Talking worked at Ascott Garden, an apartment complex in north-side Athlone that is to be replaced by condos. GEA's intervention led to the developer, Lambridge Capital Partners, linking up with Capital Region Housing to provide a home-ownership program for low-income tenants. New hopes GEA can help tenants and Nearctic resolve concerns at the Strathearn project. The signs are promising. Nearctic president Kent says the project will happen in phases over five to eight years, a period in which most tenants would normally leave. He promises that when existing apartments are torn down he will move longer-term tenants, such as Hagensen, at company expense into apartments other tenants vacate. Eventually they'll have first dibs on 88 affordable places among the project's proposed 1,750 units, Kent says. "We're hoping that some of those affordable-housing units are rental units."