Calgary Rents Are Dropping: What It Means for Landlords and How to Protect Your Cash Flow

For the first time in years, rental prices in Calgary are seeing a downward trend. As of early 2025, the average rent in Calgary is approximately $1,925 per month, reflecting a 6% decline from the previous year. One-bedroom apartments now average $1,600 per month, down 5.6% year-over-year, while two-bedroom units have dropped to around $2,000 per month, marking a 7% decline. This shift is particularly important for landlords, both new and experienced, who need to adapt their strategies to maintain profitability.

The Impact of Falling Rents on Landlords

For experienced landlords, falling rents mean a reduction in rental income, potentially impacting mortgage payments, property maintenance budgets, and overall profitability. If rental rates continue to decline, long-term property holders may need to re-evaluate their investment strategies, especially if they rely on rental income to cover expenses.

For new landlords who recently entered the market, this trend can be even more concerning. Many investors who purchased properties during the peak rental periods of 2022 and 2023 may find themselves in a situation where rental income is no longer sufficient to cover mortgage and operating costs. Those relying on high rental yields to justify their investment may need to reconsider their financial models.

How Landlords Can Protect Their Cash Flow

With declining rents, landlords must take proactive steps to maintain occupancy and cash flow. Here are a few key strategies to consider:

Enhance Tenant Retention – Keeping reliable tenants is more cost-effective than finding new ones. Consider offering lease renewals with small incentives, such as minor rent discounts or free utilities for a limited time.
Improve Property Appeal – Upgrading amenities, refreshing interiors, or adding smart home features can make units more desirable, reducing vacancy periods and justifying competitive rental prices.
Diversify Rental Offerings – Consider transitioning to short-term or mid-term rentals if demand supports it, as this can sometimes yield higher income than traditional long-term leases.
Adjust Pricing Strategically – Rather than dramatically lowering rent, offer move-in incentives, such as a free month's rent or reduced security deposit, to attract tenants without permanently reducing rental rates.
Optimize Expenses – Review operating costs to identify areas where savings can be made, such as negotiating better property management fees or finding more cost-effective maintenance solutions. CREW Property Leasing offers stress free property leasing services for only $97 per month, less than half of what most companies charge. Consider switching to lower your monthly costs.

A Five-Year Perspective on Calgary's Rental Market

Over the last five years, Calgary’s rental market has experienced considerable fluctuations. In 2020, the market was relatively affordable, with modest rent increases. However, post-pandemic migration and economic recovery fueled a surge in rental demand in 2021 and 2022, leading to double-digit rent hikes. By mid-2023, Calgary had some of the fastest-growing rental prices in Canada, driven by increased migration and limited housing supply.

This growth peaked in late 2023, and by mid-2024, early signs of stabilization emerged. With an increase in new housing supply and a slight slowdown in population growth, Calgary saw its first year-over-year rental price decline in late 2024. The trend has continued into 2025, providing some relief to renters but posing challenges for investors.

Where Are Rents Headed in 2025?

As we move through 2025, Calgary’s rental market is expected to stabilize further. With a high number of new rental units entering the market and economic conditions shifting, rent growth is likely to remain modest. Analysts predict that while rents may not continue to decline significantly, substantial increases are unlikely in the short term.

For landlords, this means adapting to a more competitive market where tenant retention and operational efficiency are crucial. While long-term appreciation remains a strong incentive for real estate investors in Calgary, short-term strategies must focus on maintaining positive cash flow and minimizing vacancies.

The Benefits of Investing in Calgary Real Estate

Calgary Real Estate Wealth sources great rental properties for Calgary landlords. Despite the short-term fluctuations in rental rates, Calgary remains one of Canada’s most attractive cities for real estate investment. Here’s why:

Affordable Property Prices – Compared to other major Canadian cities like Toronto and Vancouver, Calgary offers relatively lower home prices, making it easier for investors to enter the market.
Strong Economic Fundamentals – With a growing economy supported by diverse industries such as energy, technology, and finance, Calgary continues to be a desirable location for both businesses and residents.
Population Growth – While rental demand has cooled slightly, Calgary remains a popular destination for migration due to its high quality of life and employment opportunities.
Favorable Landlord Laws – Alberta has landlord-friendly regulations, making it easier to manage rental properties compared to other provinces with stricter rent controls.
Long-Term Appreciation Potential – Real estate in Calgary has historically appreciated over time, and as the market stabilizes, investors can expect solid long-term gains.

The Calgary rental market is undergoing a period of transition, and landlords who stay ahead of these trends will be best positioned for success. Whether through strategic pricing, property upgrades, or optimizing expenses, taking action now can help mitigate the impact of falling rents and prepare for future market shifts while capitalizing on Calgary’s strong long-term investment potential.

Posted by Calgary Real Estate Wealth on March 4th, 2025

Calgary Rents Are Dropping: What It Means for Landlords and How to Protect Your Cash Flow