Calgary’s already tight rental market is likely to come under further pressure in 2024 and 2025

If you are one of the many people struggling to find a rental apartment in Calgary or the surrounding area, a solution may be on the horizon in 2026.

However, according to a new report from the Canada Mortgage and Housing Corporation (CMHC), the city’s already tight rental market is likely to become even tighter in the coming years.

The rental vacancy rate in the Greater Calgary area – which was just 1.4 per cent in 2023 – is forecast to fall to 1.1 per cent this year and then to one per cent in 2025.

According to forecasts, the rate will then fall slightly to 1.5 percent in 2026.

Rents are also expected to continue to rise.

After rising 14.3 percent in 2023 to $1,695, the average rent for a two-bedroom apartment is expected to rise again this year to $1,859 and the following year to $1,922, according to CMHC.

This rapid growth is expected to slow in 2026. The expected average rent will then be $1,951.

Adebola Omosola, a housing specialist at CMHC, says developers have responded to rising demand for housing in Calgary by increasing construction activity to record levels in 2023.

“The problem is always how quickly supply can keep up with demand,” she said. “Because right now it’s not keeping up… that’s why we’re seeing high prices and lower vacancy rates, and as long as that continues, supply has to keep trying to catch up.”

She noted that more rental apartments were built in Calgary last year than condominiums, and that this was “the first time in a long time.”

The CMHC forecasts that the number of housing starts of all types will continue to reach record levels in the coming years under the high construction activity scenario, while it will stagnate under the low construction activity scenario.

“Industry sources indicate that the long-term leasing shortage will continue to encourage developers to build more purpose-built rental buildings in the coming years,” the CMHC report said.

“Rental housing will remain in short supply as demand continues to be driven by population growth and reduced mobility in home ownership.”

Sales prices are also likely to rise

The CMHC also expects home prices to rise in the coming years “due to strong demand fundamentals.”

This reflects the statement of the Calgary Real Estate Board (CREB).

“Basically, we have less than a month’s supply since March, and that continues to drive the price increase,” said Ann-Marie Lurie, chief economist at CREB.

“And that’s before we even enter the normally busier spring market of the next few months.”

The CMHC points out that the price increases it predicts would be “mitigated by the limited supply of cheaper housing types.”

“Demand for more affordable housing units such as townhomes and condos will boost sales in the near term,” the report said. “But affordability concerns due to high mortgage rates could delay resales of more expensive properties.”

It is also pointed out that higher property prices will increase pressure on the rental market because fewer tenants who want to buy a home will be able to afford it.

“Rental housing will remain in short supply as demand continues to be driven by population growth and reduced mobility in home ownership,” the report said.