Calgary Seeing Growth in Rental Prices
Calgary Real Estate and Rental Market Update
November 1, 2022 - Written by Jamie Palmer, President/Broker of Power Properties
Good news for Calgary landlords
So much of the news is negative these days, but here is some good news for Calgary landlords. Alberta is largely expected to lead the country in GDP growth, Calgary was the 3rd most popular inter-provincial immigration destination in Canada, and increasing interest rates are pushing rents higher!
ATB is forecasting Alberta to lead the country in GDP growth at 5% in 2022 and 3% in 2023, while the rest of Canada is expected to head into a recession (negative GDP growth). Beyond the obviously good news that Calgary and Alberta will continue to see positive economic growth, this growth will likely attract more people from across the country in search of jobs and lower a lower cost of living. This in turn will increase demand for housing and help keep rents and sales prices high.
We are already seeing signs of Canadians picking Calgary as the place to move to for a better life. With a net immigration of almost 12,000 people moving to Calgary in 2021 and a similar number expected in 2022, Canadians are realizing that clean air, high wages, lower taxes, lower housing costs, and high quality of life are a winning combination. These strong immigration numbers are again helping to increase rents and demand for housing overall.
Rising interest rates lead to rental demands
The Bank of Canada has raised interest rates six times in 2022 for a total increase of 3.5%. On January 1, 2022, the best 5-year fixed rate in Canada was 2.34%. As of October 27, 2022, the best 5-year fixed rate in Canada was 4.69%. Since the beginning of 2022, fixed mortgage rates in Canada have gone up a total of over 2.3%, which represents an increase of just over 100%. This has taken a huge bite out of buyers’ buying power! To understand the impact in real dollars, in January 2022, $2000/month would have paid for a $454,000 mortgage, but in October 2022, that same $2000/month only pays for a $353,000 mortgage, that’s a $101,000 reduction in buying power! How is that good news you might ask? It forces many would-be home buyers to remain renters, which creates additional demand for rental properties again keeping rents high.
After five years of oil-crash-depressed rents (2015-2020), and two years of pandemic-suppressed rents, Calgary is finally seeing growth in rental prices, making it once again beneficial to own rental properties!
Written by Jamie Palmer, President/Broker of Power Properties Ltd.
Jamie Palmer is the President and Broker of Power Properties. He holds a Certified Property Manager (CPM®) designation, the highest designation in Property Management in North America. He earned an Honors degree from the University of Toronto, and he has over two decades of experience in property management.
About Power Properties Ltd.
Founded in 1980, Power Properties has been providing hassle-free property management services to property owners, property investors and non-residents with homes in Calgary, Alberta for over 40 years. Our full-service property management includes everything from move in to move out, so you don’t have to worry about the day-to-day operations of your rental property. With a team of licensed professionals, years of experience, and award-winning service, you can rest assured that your property is in good hands.
