Calgary's Rental Market Predicted to Tighten Further in 2024

After a challenging year for renters in Calgary, many are hoping 2024 will bring some relief. However, experts warn that the upcoming year is unlikely to offer any respite.
 
The pressure on Calgary's rental market continues to mount as people flock to Alberta from both international locations and within Canada. Economists predict this strain on the housing sector will persist until at least 2025, despite thousands of new units currently under construction.
 
Taylor Pardy, CMHC's lead economist for the Prairies and Territories, forecasts a further decrease in the rental vacancy rate over the coming years. As of October 2022, Calgary's vacancy rate had already hit a near-decade low of 2.7%, according to recent data from CMHC. An updated figure is expected later this month.
 
Pardy explains that these dynamics—driven by supply and demand—are also set to impact prices: "We anticipate rents continuing their upward trajectory at an even faster pace than we've seen over the past five years."
 
To address this issue, policymakers in Calgary and beyond are heavily focused on increasing housing production to accommodate population growth. Approved by council last September was the City of Calgary’s new housing strategy, which aims to build an additional 3,000 non-market homes each year along with an extra 1,000 market homes annually.
 
Currently underway in Calgary are more than 9,000 units—a record number compared with recent decades—but Pardy warns it takes time for these developments to reach completion: “In the meantime, there are more people moving into the area, so we need to maintain purpose-built rentals while encouraging new construction."
 
Eventually, he predicts some stabilization, but not before several challenging years still ahead.
 
Zonda Urban—the analytics firm specializing in real estate and rental data—estimates around 5k new purpose-built market rentals becoming available over the next year, followed by another anticipated batch of approximately 3000 thereafter; however, these figures don’t account for subsidized or privately rented units.
 
Justen James, market research advisory associate at Zonda Urban, commented: "In terms of [rental projects] that have been permitted but not yet constructed—for whatever reason—that number sits around 15k units in Calgary."
 
Yet according to Moshe Lander, an economics professor at Concordia University and an Alberta resident, this simply isn’t enough. He identifies two key issues: local municipalities' failure to establish zoning laws permitting high residential housing construction within a short timeframe and the lack of incentive for builders to meet demand quickly.
 
For Lander, the solution lies more in focusing on density than urban sprawl. However, he argues that homeowners often form a stronger lobbying group than renters, which presents its own challenges: “When faced with living in a downtown high-rise apartment or having your own backyard picket fence—who wouldn’t choose the latter? "
 
Lander doesn't foresee any immediate cooling of the market. Moreover, he suggests many tenants will likely also bear the brunt of rising property taxes this year due to an ongoing housing shortage, leaving landlords firmly holding leverage over their tenants.