Two divergent trends are now playing out in Calgary’s housing market, as blistering rent increases are finally slowing down, while the sale of $1 million-plus homes is taking off.
The latest report by Rentals.ca finds price increases in Calgary’s rental market cooled to the lowest annual level in more than two years in June. Average rents rose by four per cent to average almost $2,100.
While the increase is above the annual rate of inflation, it’s a significant deceleration from hikes seen one year ago, when Calgary renters faced a whopping 18 per cent jump in June 2023.
The new figures are also a far cry from the eye-popping increases now hitting condo and apartment tenants in Edmonton. Alberta’s capital led the country’s six largest cities with annual rent hikes of 14 per cent in June, averaging $1,564.
Calgary has also seen a substantial increase in new home construction as building activity has sped up. Housing starts of all types jumped by 38 per cent across the city during the first six months of this year.
In the apartment category, the number shot up by 50 per cent, according to a Calgary Real Estate Board (CREB) report.
“If you compare it with other major cities in Canada, it’s quite the swing,” Giacomo Ladas with Rentals.ca. said in an interview.
“It will be interesting to see how interest rates affect things . . . when interest rates are high, the demand for rental apartments increases.
“When interest rates are low, home ownership is now more affordable and then we see rental demand decrease. So, a lot of this is tied into what’s going to happen with interest rates.”
That direction seems clear enough.
The decision offers modest relief for consumers battered by soaring rates and borrowing costs. Bank of Canada governor Tiff Macklem indicated the central bank’s intention is to lower rates as inflation is tamed.
For Calgary renters, vacancy rates remain extremely low. In April, Canada Mortgage and Housing Corp. projected the rental vacancy levels will drop to 1.1 per cent this year.
Yet, there are anecdotal signs of some progress, said Meaghon Reid, executive director of Vibrant Communities Calgary.
“At the beginning of this year, and all of last year, the tone of what we were hearing around looking for a house was panic . . . that I’m about to lose my place because the rent has increased so much,” Reid said.
“I’m not hearing that same amount of panic right now, and I think that’s positive.”
On the home buying front, a distinctly different trend is unfolding — a rise in the sales of more expensive properties.
During the first six months of the year, the purchase of $1 million-plus homes in Calgary jumped by 46 per cent from the same period in 2023.
And deal-making for luxury houses above $4 million soared by 75 per cent, according to a new report by Sotheby’s International Realty Canada.
The continuing surge of people relocating from Ontario and British Columbia to Alberta is helping drive the sale of more expensive condos and detached houses in Calgary, said Don Kottick, CEO of Sotheby’s International Realty Canada.
The city’s relative affordability compared with other large centres, its overall livability, strong economy and job creation are all factors in drawing newcomers to Calgary.
He noted condo sales in the city valued at more than $1 million jumped 27 per cent during the first half of the year.
“This is bringing in buyers with a different mindset. And we’re seeing this particularly in the top-tier condos,” Kottick said in an interview.
“Everything is lining up right now for Alberta.”
During the first half of the year, 1,119 homes sold for more than $1 million, up from 772 in the same period in 2023, a report by CREB indicates
While demand for homes above $1 million has been spurred by interprovincial migration, some people from Alberta are also looking to upgrade, noted John Hripko, of Hripko and Partners Real Estate Team with Royal LePage Benchmark.
And as overall prices are rising, it’s propelling more consumers to look toward seven-figure properties.
“In the market up to $2 million, it has definitely picked up considerably over the past several months,” Hripko said.
“Just from pure inflation . . . If you had a $900,000 home, suddenly it’s over the $1-million mark. And $1 million today is a data point.”
CREB chair Christian Twomey pointed out the sale of higher-priced houses has lagged other segments of the market in recent years, such as homes priced under $600,000. But the situation is evolving.
“If we look back a year or even two years, that range above $1 million really hasn’t had a good upward thrust yet, so there’s great value for your dollar in that style of home right now,” Twomey said.
It’s also become a more competitive market for those looking to buy houses in the city — such as Lisa Cox, a realtor who recently moved back to Calgary with her husband after living in Ontario for 22 years.
After selling their home in Ontario in February, they encountered a Calgary market with tight inventory levels and escalating prices.
They were outbid for one home in the spring and eventually bought a house in Shawnee Park.
“We were looking for something around $850,000 . . . We lost the first house that we really wanted and then realized, we have to pay — and we have to pay big and win a home,” Cox said Friday.
“What it came down to was availability.”
Chris Varcoe is a Calgary Herald columnist.