Calgary's already tight rental market expected to be squeezed even further in 2024 and 2025

If you're one of the many people struggling to find a place to rent in Calgary or the surrounding area, there may be some relief on the horizon — in 2026.

For the next couple of years, though, the city's already tight rental market is expected to be squeezed even further, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).

It forecasts that the rental vacancy rate for the Calgary metropolitan area — which stood at just 1.4 per cent in 2023 — will fall to 1.1 per cent this year and then one per cent in 2025.

The rate is then forecast to ease, slightly, to 1.5 per cent in 2026.

Rents are expected to continue to rise as well.

After jumping 14.3 per cent in 2023 to $1,695, the CMHC says the average rent for a two-bedroom unit is expected to increase again to $1,859 this year and then $1,922 the next.

That rapid growth is forecast to slow down in 2026, with a projected average rent of $1,951.

Adebola Omosola, a specialist in housing economics with the CMHC, says developers have been responding to the surging demand for housing in Calgary by ramping up construction to record levels in 2023.

"The struggle is always how fast can supply keep pace with demand," she said. "Because right now it isn't keeping up … which is the reason why we're seeing high prices, we're seeing lower vacancy rates and, as long as that continues, supply will have to keep trying to play catch up."

She noted that new construction of purpose-built rental units outpaced that of condominiums in Calgary last year, which is the "first time in a long while" that's happened.

The CMHC forecasts housing starts of all types to continue setting records in the coming years under its high-building scenario or flatten out in its low-building scenario. 

"Industry sources suggest that the long-term rental supply shortages will continue to encourage developers to construct more purpose-built rentals for years to come," the CMHC report reads.

"Rental units will remain in short supply as demand continues to be driven by population growth combined with less mobility into home ownership."

Sale prices also expected to rise

The CMHC also expects home sale prices to increase in the coming years "due to strong demand fundamentals."

That echoes what the Calgary Real Estate Board (CREB) has been saying.

"We basically have less than one month of supply, as of March, and that's really continuing to drive a lot of price growth," CREB chief economist Ann-Marie Lurie said.

"And this is before we even hit what is our typical busier spring market in the next few months."

The CMHC notes its forecast price increases are "moderated by limited inventory of lower-priced dwelling types." 

"The demand for more affordable units such as row homes and condominium units will drive sales in the short term," the report says. "But affordability concerns stemming from high mortgage rates might delay resale transactions of higher-priced properties."

It also notes that higher real estate prices will put more pressure on the rental market because it will mean fewer tenants who would like to buy a home will be able to afford it.

"Rental units will remain in short supply as demand continues to be driven by population growth combined with less mobility into home ownership," the report says.