A Tale of Two Headlines
April 1, 2025 - Written by Jamie Palmer, President & Broker of Power Properties
TLDR: Calgary has a glut of supply, and rents are dropping; Medicine Hat and Lethbridge have no supply and tons of demand rents are rising.
Conflicting Headlines, One Truth
I have two fairly contradictory headlines, one says “rents are an 18-month low and dropping” the other says “demand for housing is going to continue to rise as will unaffordability”. So, which one is right? Well, actually, they are both right… Let’s break down the story by each city.
Calgary: A Glut of Supply Driving Down Rent
In Calgary, there has been an absolute glut of new purpose-built rental properties entering the market. This has largely been fueled by CMHC’s MLI-Select program, which is doing exactly what it is supposed to do, incentivize building new “affordable” housing units (affordable is in quotes because to me $1600/month is not really affordable housing, but it’s all relative). While the most noticeable type is the missing-middle projects that are popping up in every inner-city neighbourhood (they look like 4 townhouses with 4 basement suites on a standard lot, neighbours hate them), the program also includes larger apartment buildings. The program was launched in 2022, and since it takes about two years to build most of these projects, they all entered the market toward the end of 2024 and early 2025. This is supported by the City of Calgary’s own numbers: The City of Calgary processed a record number of building permit applications. The City issued 18,168 residential building permits in 2024 with single construction permits increasing 27% and commercial multi-family applications increasing by 28% year over year compared to 2023, which was also a record-setting year. So with an increase in supply comes a corresponding decrease in rent.
Medicine Hat: High Demand, No Vacancy
In Medicine Hat there has been lower adoption of the MLI-Select program, largely due to more restrictive land-use bylaws, as a result, they have not seen a rapid expansion of purpose-built rental properties although 96 new multi-family units were scheduled for completion this year (up from 69 in 2023). At the same time, Medicine Hat has seen rapid population growth over the past year putting additional pressure on the rental market. The most recent reports show the vacancy rate at 1.1%, which is effectively zero vacancy. So Medicine Hat is bucking the national trend. With strong population growth, low purchase prices (relative to Calgary), and low vacancy, Medicine Hat is definitely a place to invest, and if you weren’t aware Power Properties has an office in Medicine Hat, so we can manage the property for you.
Lethbridge: Limited Construction Meets Population Growth
Lethbridge is tracking a similar trend to Medicine Hat, with a vacancy rate of 2.35% based on the most recent reports. There were only 13 new multi-family permits/starts in 2024 compared to 20 in 2023, so again there has been limited new construction. While at the same time, Lethbridge’s population has grown by over 4% in the last year. Lethbridge is bucking the national trend, making it a great place to invest for similar reasons as Medicine Hat: lower purchase prices, low vacancy rates, and a growing population. Power Properties also has an office in Lethbridge. We actually have a waiting list of tenants for Lethbridge.
Looking Ahead: What to Expect in 2025 and Beyond
On the other hand, it doesn’t take an economist to understand that if you are bringing in 5 new immigrants for every new home you are building, and you are already short on housing, prices are going to increase over the longer term. So Calgary should absorb the new units over the course of 2025/2026, but rental price growth will be limited until the inventory is reduced. Medicine Hat and Lethbridge, will continue to see very tight rental markets, which should lead to continued rent increases. Overall in the longer time horizon, real estate will continue to be an excellent wealth generator.
If you are interested in investing in Medicine Hat or Lethbridge reach out to tony@powerproperties.net and ross@powerproperties.net respectively and they would be happy to help you find the right investment.
Written by Jamie Palmer, President & Broker of Power Properties
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
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, Lethbridge and Medicine Hat for over four decades. 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.
