Prospective homebuyers are increasingly opting for apartments, which has helped slice the local rental vacancy rate in half from last year, according to a new report released yesterday. The Canada Mortgage and Housing Corp. said the vacancy rate in the Kitchener census metropolitan area sunk to two per cent in April from four per cent last April.

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That gives the region the second lowest vacancy rate in Ontario, after Sudbury's 0.7 per cent. A vacancy rate of two per cent means only 20 out of every 1,000 rental units are available to rent. The faltering economy has forced would-be homebuyers away from home ownership, said Erica McLerie, an analyst with the housing corporation.

"People do take a second look at home ownership," she said. McLerie said a record number of renters bought homes last spring, fuelling record house sale numbers. However, the struggling economy, coupled with surging home prices, is causing people to rethink their options, she said. "The gap between owning and renting continues to increase," she said. "There are a lot fewer people looking into ownership." The average price of a single- detached home in Kitchener and Waterloo rose to $308,010 last month, which represents a 12-per-cent yearly increase. On Wednesday, both the Kitchener-Waterloo Real Estate Board and the Real Estate Board of Cambridge reported double-digit declines in home sales, which marked the fourth straight monthly decrease.

McLerie said there were other factors that contributed to the declining vacancy rate. The region has the youngest population of any urban area in Ontario, she said, which helps drive demand for rental housing. Immigrants also continue to move to the region at a steady pace, many of whom choose to live in an apartment initially. The vacancy rate has also been squeezed by the fact that fewer new rental units are being built this year compared to last year, when hundreds of new units were built.

Rents in the region were virtually unchanged despite the tightening supply of rental units. The housing corporation said the average rent for a two-bedroom apartment was $838 in April, down from $839 a year earlier.

The average rental vacancy rate in Canada's 35 largest urban areas was 2.6 per cent in April. Western Canada continued to see vacancy rates of around one per cent, thanks to the flow of eastern Canadians moving west for work. Victoria and Kelowna, B.C., had the lowest rates in the country at 0.3 per cent. Windsor had the highest at 13.2 per cent.

Michael Hammond, RECORD STAFF - The Record - mhammond@therecord.com