CMHC Has Some Things to Say About our Housing Market

The Canada Mortgage and Housing Corporation released its 2023 Northern Housing Report just over a week ago and, as always, it gave us some interesting insights into where the Yellowknife real estate market is headed.  One challenge with these annual reports is that many of the statistics are more than a year old by the time the report is published, but we can supplement its findings with other information that is readily available in the marketplace.

Here are some key themes from the report:

Relief for Renters is on the Way

Despite the fact that there were no new rental developments completed in 2022,  the vacancy rate doubled to 3.5% in 2022, which represents 70 vacant apartments and townhomes.  This is good news for renters, and more good news is on the way because we now have between 170 and 240 apartments under construction, which will increase the stock of rental apartments by 10% to 14% in 2024.  Does this mean the vacancy rate will shoot up to the high teens?  It depends how much pent-up demand there is in the marketplace.  How many “fly-in-fly-out” workers will put down roots instead of continuing their bi-monthly commute, and how many households are overfilled, with residents prepared to move out to fill the vacancies?  Impossible to know, but it will be interesting to watch.

Residential Construction was Down 21%

This isn’t much of a surprise given that for the last couple of years there has been no new residential land for sale in Yellowknife.  The interesting question is, if there were land for sale, would our population be growing faster than it is now?  Does housing in Yellowknife work on a “build it and they will come” basis?  I think it does to a large degree.  It wasn’t that long ago that many locals questioned the likelihood of a couple hundred units at Lakeshore and Summit Developments finding buyers, just given that we have been in a prolonged period of slow but steady GDP decline.  With few new jobs, what could drive population growth? But they certainly did sell out – our population grew to absorb the new units, and we quickly returned to what seems like a perennial housing shortage situation.  It’s impossible to say why this happens, but the “pent up demand” argument above could certainly seem to apply to home ownership just as much as to home rentals.

Build it and They Will Stay?

The third factor in the pent-up demand equation, besides fly-in-fly-out workers and over-filled housing, is retirees.  CMHC found that, “older people continue to account for an increasing share of Yellowknife’s population. The population that is 60 years and older now makes up 13.4% of the population. That’s more than double the share this group accounted for in 2010.”

As has been well reported, the huge baby boom demographic is leading to a similar population shift right across the country.  But the question, is if we had better housing options – or even just more housing options – for seniors, both of the high density (apartments) and low-density (patio homes and bungalows) varieties, would even more people choose to stay here in retirement?  Again, I think the answer is yes.  I have no way to prove this theory, but our team members hear from lots of outgoing residents that they would have stayed if they could have found the type of housing they are looking for in retirement.  It also doesn’t take much more that a quick drive around town to see that we don’t have much in the way of the type of housing that seniors look for in other cities.

Why Does Any of This Matter to Yellowknife Property Owners?

The key takeaways for me are that demand for single family homes and townhomes will remain very strong – because we have no vacant land available to build new units.  But demand for condominium apartments could soften over the next two years, because a lot of new apartments are coming down the pike.

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