A dramatic plunge in new construction across 乌鸦传媒 shouldn鈥檛 be taken as a sign of looming economic trouble, city councillors heard Monday.听
鈥淲e鈥檙e seeing right now development applications between the five and ten year average. I wouldn鈥檛 say this is a crisis time. The real estate market is cyclical, and we expected this cycle to happen,鈥 top city planner Ryan Smith told council.听
鈥淎nd it will probably continue through until some point next year,鈥 he said. 鈥淚f I had to guess, I would say this year is probably going to be the bottom of the cycle, probably into next spring. And then we鈥檒l see a stronger 2025.鈥
The total number of building permits issued by the city will likely end up being about 30 per cent less than last year, Smith said.听
Even more dramatic is the drop in the value of new construction. Based on current volumes, the year-end value will end up being about $700 million, far below the $1.8 billion mark set last year.听
鈥淪o it鈥檒l be about half, just under half, of what we saw last year,鈥 Smith said.听
The downturn in construction is likely attributable to a number of factors, council heard. The onset of the pandemic in 2020 caused interest rates to fall to historically low levels, triggering a surge in borrowing by developers.听
In 乌鸦传媒乌鸦传媒 case, much of the recent construction has been of large scale residential projects, which have considerable permit value. With those projects now either completed or nearing completion, Smith said there will likely continue to be an easing of apartment vacancy rates.听
鈥淭he historically low vacancy rate may be easing,鈥 he said. 鈥淭here乌鸦传媒 lots of new rental supply coming onto the market.听
鈥淚 don鈥檛 know if you鈥檝e noticed this, but you can drive around certain neighbourhoods and start to see 鈥楩or Rent鈥 signs, the homemade ones, which I don鈥檛 remember seeing in the last five years at all,鈥 he said.听
Along with the recent surge in new apartment construction, the provincial and municipal crackdown on short-term rentals is helping to raise the apartment vacancy rate, council heard.听
鈥淭hose who are in rentals right now, that may not suit their needs, a new building comes up, and there乌鸦传媒 incentives to rent in that new building. They choose to rent in that new building, and the rents in the one they moved out of maybe go a bit lower to entice someone to move into that building,鈥 he said.听
鈥淎nd those lower rents filter themselves through the market,鈥 Smith said.听
Conversation around the current vacancy rate is a bit speculative, however, as Canada Mortgage and Housing Corp. surveys 乌鸦传媒乌鸦传媒 rate only once a year, typically in February, council heard.听
There乌鸦传媒 only been one occasion in the past 20 years when 乌鸦传媒乌鸦传媒 apartment vacancy rate has been above three per cent. That乌鸦传媒 a significant marker since provincial regulations on short-term rentals allow for municipalities to permit the practice when vacancy rates rise above three per cent.听
This fall, council will receive a staff report on whether the crackdown on short term rentals significantly impacted tourism and/or caused hoteliers to 鈥渏ack up鈥 their room rates,
鈥淲e鈥檒l do our best to bring some information that乌鸦传媒 well-researched to council for a discussion on that,鈥 Smith said.
Any possible change on short-term rental rules would be at the discretion of city council.听