The Sales Boom is Done, Make Way for the Rental Boom
Calgary Real Estate and Rental Market Update
September 1, 2022 - Written by Jamie Palmer, President/Broker of Power Properties
Sales are slowing down
Real estate sales in Calgary, have effectively plateaued for the year and while we don’t expect the dramatic crash we are seeing in Toronto and Vancouver, the days of ten offers on the first day are behind us. It is largely expected that as sales return to a more balanced market, the increase in sales prices will also slow, and will likely follow the historical pattern of declining prices through the winter months, and increases in sales and prices through the spring.
But the rental market is heating up
On the other hand, rents in Calgary have increased twenty-five to thirty percent year-over-year! That is a staggering increase, even more, remarkable is the speed with which the rents increased. While we have seen rents gradually increasing through 2022, July and August saw a dramatic spike in average rent. This of course is great news for landlords, as the increase in rents will help offset the increasing costs for repairs, property taxes, and insurance we have experienced over the past several years. The average price for a three-bedroom, two-and-a-half-bathroom house in Calgary is now $2661/month, up from $2215/month at this time last year. Even apartments are seeing significant increases with the average one-bedroom apartment renting at $1514 up from $1228 last year. These increases are being driven by several factors including increasing demand, rising interest rates, and reduced inventory.
Increased demand for housing in Calgary
More and more Canadians are choosing to make Calgary their home, in fact, Alberta was the number one inter-provincial destination in the country. Additionally, as Covid restrictions have eased, international immigration has opened up, and more and more people from all over the world are moving to Calgary to take advantage of our excellent quality of life and affordability. Calgary’s net immigration numbers are now on par with peaks from 2015. Rising interest rates are making purchasing homes less affordable for buyers forcing more people to rent. There is another Bank of Canada rate announcement happening on September 7th, it is largely expected that they will further increase interest rates, making it even more difficult for buyers to qualify for a mortgage, which equals even more renters.
At the same time, the number of available rental properties has decreased by almost 44%. This is in large part due to the rapid increase in sales prices in Calgary over the past eighteen months, during which many landlords “cashed out” and sold their rental properties, reducing overall rental inventory.
I would strongly suggest you take advantage of the current market and ask a professional Property Manager for their recommended rental increase. For those of you concerned about vacancy, the average days-on-market for rental properties is only twenty-nine days, down from fifty-two at this time last year. This means if you start advertising your property 45 days before the end of your tenant’s lease, you have a higher chance of renting it back to back.