How much rental supply would come from legalizing suites?

[bizaro86]

I was going to post this in Wade's thread about the affordability index. (http://myreinspace.com/public_forums/Real_Estate_Discussion/62-18259-RBC_Affordability_Report_Sept_2010.html) but thought better of derailing it even more with specific discussions of the future of Calgary real estate.



My question is thus: After the upcoming municipal election, it seems likely that some sort of additional secondary suite legalization will occur in Calgary. I'm in favour of this as a general city policy, but thoughtful regarding its affect on me personally as someone who rents out apartment style condos to young people.



If there were to be a wave of basement conversions, wouldn't that increase the rental supply, and (channeling econ 101) lower the price (monthly rent) for rental housing? I'd be especially interested in anecdotes or examples from other cities where a change of this type has occured. Rents have come down since the top of the boom in Calgary, and I'd be interested in people's thoughts on this potential future downside.



Michael

 

[DaveRhydderch]

In this case, as always, Calgary is behind everyone else. I did a lot of researching regarding legalizing suites after the grant program was brought in last year. I can`t dig up all the work I did, but Vancouver, Edmonton, and Saskatoon have all gone in this direction already.

I wouldn`t expect a change in rent and here`s why:

1. There`s already 80k illegal suites.

2. It costs money and time most people don`t want to spend.

3. Only so many homes can has decent suites (i.e. bungalows) and its generally only first time home buyers that would put up with them.

4. Basement suites are a bit of a niche market. Would you rather live in a basement suite or an apartment? Most people would rather spend a little more to live in an apartment if at all possible.


I think also the process of legalizing suites will still be painfull, and most people wouldn`t go through the hassle.

 

[magoomba]

Agree with Dave.
There`s already a truckload of illegal and non-conforming suites.
Many tenants already rent them.

We tried to do a legal conversion a while back but the rules are so "bass ackwards" that we ended up just renting out the entire house.

 

[Berubeland]

I don`t think the idea is tremendously increase the rental supply for the city but rather to encourage the owners of already existing suites to legalize them.

Some of these suites are fire traps and in very bad condition.

The quality of tenants to be found for these suites leaves an awful lot to be desired unless you are in a sought after area. For instance in my area, with no transit very close, apartments in buildings go for 750$ for a one bedroom, plus when I rent the basement out I have to deal with extra utilities to pay, about $150 extra per month.

 

[Sherilynn]

I agree that for the most part, illegal suites will be legalized rather than new suites being created.

And by legalizing the existing suite, it will likely be substantially upgraded thereby increasing achievable rent.

My upgraded suites earn rents similar to apartments (utilities-included so as to compare apples to apples). Of course, the basement suite is bigger and has a yard (which the tenants maintain), so I like to think that the tenants get good value for their money.

And I find that the people who choose a basement suite do so because they don`t want to live in an apartment but cannot afford to rent a townhouse or house.

That plus the increased safety of legalized suites means it`s all good news.

Regards,
Sherilynn