If you thought Calgary's rental situation was already tough, brace yourself because it got even tougher in 2023. According to a new report from the Canada Mortgage and Housing Corporation (CMHC), Calgary's average rental cost for a two-bedroom apartment skyrocketed by 14.3% last year, marking the highest year-on-year jump across all major markets in Canada.
Calgary's Steep Rise
The average cost to rent a two-bedroom apartment in Calgary hit a staggering $1,695 per month in 2023, a significant increase from the previous year. This surge in rental prices is the sharpest the city has seen since 2007, making it the fastest-growing rental market in Canada. Despite the steep climb, Calgary's average rental cost remains lower than cities like Vancouver, Toronto, Victoria, and Ottawa.
What's Driving the Spike?
Multiple factors contribute to Calgary's soaring rental prices, as explained by Taylor Pardy, the lead economist for the Prairies and territories at CMHC. One major reason is Calgary's "relative affordability," which makes the city an attractive option for Canadians migrating to Alberta. Pardy points out that about 70% of interprovincial migrants moving to Alberta come from higher-priced markets like Vancouver and Toronto, where both homes and rents are more expensive.
Additionally, the report highlights high interprovincial migration as a significant factor impacting rental supply in both the Calgary and Edmonton markets. Although housing supply in Calgary grew by 6.2% year-over-year, surpassing other major markets in Canada for purpose-built rental units, it wasn't enough to meet the tightening demand. This, coupled with student housing scarcity and high interest rates for homes, has resulted in high demand for purpose-built rental housing, further outpacing supply.
Affordability Concerns
The surge in rental prices has led to worsening affordability for renters, particularly for those with low incomes in major Canadian cities. Rising mortgage payments and utilities, to some extent, are being passed on to tenants, further contributing to the affordability crisis. As a result, the two-bedroom vacancy rates for more affordable units remained below one percent in 2023, exacerbating the challenge for low-income renters.
Real Stories: The Struggle is Real
These escalating rental costs are taking a toll on individuals like Paige Magotiaux, a 22-year-old renter in Calgary. Despite working over 40 hours a week, she finds it challenging to afford a comfortable lifestyle. Even with a budget of $1,100 and a roommate, she struggles to make ends meet. Magotiaux, who recently returned to Calgary after living in Saskatchewan and Victoria, describes the current rental market as a shock.
"I can survive, but being 22, I want to be able to go out to dinner and go to the movies and stuff like that. Right now, I can't do that," says Magotiaux.
The Outlook
Looking ahead, the CMHC predicts that rental housing supply will continue to grow in Calgary. The agency remains optimistic about purpose-built rental unit supply growth, citing new housing developments in the city's northwest and downtown office conversions as positive signs for the future. As supply meets demand, the gap between condo rents and purpose-built rents is expected to narrow.
Though the Calgary rental market faces challenges, there is hope for improvement. With careful planning and support from the government and housing authorities, it is possible to strike a balance and create a sustainable rental market that benefits both renters and landlords alike.
Taylor Pardy, the CMHC’s lead economist for the Prairies and territories, says Calgary’s 'relative affordability' has likely contributed to more interprovincial migration.
Paige Magotiaux, 22, has a rent budget of $1,100. She says the Calgary rental market was 'a shock to come back to' after living outside the province.
