Buckle up, renters — Calgary's rental market expected to tighten further in 2024

After a difficult year for Calgary renters, many are hoping for some relief in the rental market this year — but experts are warning 2024 will likely come with anything but.

As people continue to move to Alberta in droves, both internationally and from within Canada, economists say pressure on Calgary's rental market is expected to persist until at least 2025 — even with thousands of new units under construction.

Taylor Pardy, CMHC's lead economist of the Prairies and Territories, says the rental vacancy rate is forecasted to decrease further over the next few years.

Calgary's vacancy rate was already at a near-decade low in October 2022, at 2.7 per cent, according to CMHC's most recent numbers. An updated number is expected to be released later this month.

Owing to supply and demand, Pardy says that's also going to affect prices.

"We are anticipating rents to continue to go up, and perhaps at a faster pace than we've seen in, say, the past five years," said Pardy.

Along with policymakers in Calgary and beyond, the housing agency is laser-focused on getting more housing built to accommodate the growing population.

The City of Calgary's new housing strategy, which was approved by council in September, aims to get 3,000 new non-market homes built each year, and 1,000 more market homes than usual each year.

Pardy says over 9,000 units are currently under construction in Calgary — a record in recent decades, he says.

"But it's going to take time to bring that to market, and in the meantime there are more people moving to the Calgary area. So we need to continue to maintain purpose-built rental housing and encourage new construction," he said.

"Then eventually, we will likely see some stabilization, but that's down the road."

Supply not keeping up with demand

According to Zonda Urban, an analytics firm that tracks real estate and rental data, roughly 5,000 new purpose-built market rental units are expected to come on stream in Calgary in the coming year, with 3,000 more expected after that.

Those numbers don't include subsidized housing units or units that will be privately rented out by landlords.

"In terms of [rental projects] that have been permitted but haven't gone under construction — either because it hasn't been approved yet or they've been sitting on it even though it is approved — that's at about 15,000 units in Calgary," said Justen James, a market research advisory associate with Zonda Urban.

Still, Moshe Lander, economics professor at Concordia University and an Alberta resident, says supply is failing to keep up, and that's a major problem.

"Part of that is a function of the local municipalities failing to create zoning laws that allow for high residential housing to be built in a short amount of time. But part of it is also that there's a lack of incentive for home builders to jump in there and build enough units to try and meet demand."

To alleviate the housing crunch, he says city council should focus more on density instead of urban sprawl. But he says homeowners are generally a more powerful lobby than renters — and that comes with its own challenges, too.

"The city can just keep growing and when you offer somebody the option of, would you like to live in a high-rise apartment downtown or would you like to have your own picket fence backyard, well, who's not going to take the picket fence backyard?"

Lander says he doesn't see the market cooling anytime soon, and this year, many tenants will also likely bear the brunt of increasing property taxes, he says.

"There's such a housing shortage, the leverage is still in the hands of the landlords as opposed to the tenants."