Rental Rates Are Falling In Calgary - Don't Panic
Rental rates are falling, and it's taking longer to fill vacancies. Don't panic. While the market is shifting, there are strategies landlords can adopt to navigate these changes successfully. If there's one thing we have experience with at Calgary Real Estate Wealth, it the ups and downs of the rental market. While we all want to see rents increase at a steep rate in both the long term and the short term, the reality is that in the short term, rents rise and fall depending on many factors we can't control.
Calgary's rental market has experienced notable shifts recently, characterized by declining rental rates and extended periods required to lease properties. Several factors contribute to this evolving landscape, including an influx of purpose-built rental units, a slowdown in population growth, and emerging economic challenges.
Declining Rental Rates and Increased Vacancy
As of January 2025, Calgary's average rental rates have decreased by 6% year-over-year, settling at approximately $1,925 per month. This decline is evident across various unit types, with one-bedroom apartments averaging $1,600 per month—a 5.6% decrease from the previous year—and three-bedroom units experiencing an 8.7% drop to $2,412 per month.
This downward trend in rental rates aligns with a significant increase in the city's vacancy rate, which rose to 4.6% in 2024. The higher vacancy is primarily attributed to the substantial addition of new rental units, many of which are positioned at the higher end of the pricing spectrum and have taken longer to lease.
Surge in Purpose-Built Rental Developments
A key factor influencing Calgary's rental market is the unprecedented development of purpose-built rental properties. In 2024, the city saw the completion of 5,500 new rental units, surpassing the previous year's 3,216 units and setting a new record. This surge in supply has played a crucial role in alleviating housing demand but has also contributed to the increased vacancy rates and downward pressure on rental prices.
Deceleration in Population Growth
Calgary's population growth, a traditional driver of housing demand, has shown signs of slowing. Factors such as reduced interprovincial migration and a decline in international student arrivals have contributed to this trend. The "Alberta is Calling" campaign, which previously spurred significant population influx, has seen diminishing effects, leading to a tempered demand for rental housing.
Economic Considerations and Emerging Tariff Concerns
While Calgary's energy sector continues to be a significant economic driver, the city faces potential challenges from emerging trade tensions. The Alberta government's recent decision to halt U.S. liquor sales, a response to escalating trade disputes, exemplifies the broader economic uncertainties that could impact various sectors, including housing. Such measures may affect investor confidence and economic stability, indirectly influencing the rental market.
The Importance of Tenant Screening
In a shifting rental market, property owners must exercise due diligence when selecting tenants to minimize future issues. Conducting thorough tenant screening, including reference and credit checks, is crucial. Reference checks with previous landlords can provide insight into a tenant's reliability and payment history, while credit checks offer a clear picture of their financial responsibility. Additionally, personal interactions and gut feelings about a prospective tenant can be valuable indicators. Ensuring tenants are a good fit for the property will reduce the risk of missed payments, property damage, and evictions, ultimately protecting the landlord's investment in an increasingly competitive market. CREW Property Leasing can help you become a better landlord. Read on to get some helpful hints.
Strategies for Navigating the Market Shift
Given the evolving rental landscape, landlords can implement various strategies to stay competitive and maintain occupancy rates:
- Offer Incentives: Providing incentives such as one-month free rent, reduced security deposits, or free parking can make a property more attractive to prospective tenants.
- Adjust Rental Pricing: Staying flexible with rental rates and aligning them with market trends will help properties remain competitive.
- Enhance Property Appeal: Upgrading appliances, adding modern finishes, and maintaining common areas can increase tenant interest and retention.
- Improve Marketing Efforts: Utilizing online listing platforms, social media, and professional photography can help attract quality tenants faster.
- Consider Short-Term Rentals: Exploring short-term or furnished rental options can open up additional revenue streams, especially in high-demand areas.
By proactively adapting to these market conditions, landlords can mitigate vacancies and sustain their rental income despite broader economic challenges.
Conclusion
Calgary's rental market is undergoing a period of adjustment, influenced by increased housing supply, moderated population growth, and emerging economic challenges. For property owners and investors, these developments underscore the importance of strategic planning and adaptability in a shifting landscape. Prospective tenants may find opportunities in the current market dynamics, benefiting from more competitive rental rates and a broader selection of housing options.
Calgary Real Estate Wealth is a full service real estate investment firm that sources, analyzes & negotiates premium investment properties for its investors since 2006. Calgary Real Estate Wealth offers mentorship on all aspects of real estate investing investing through bi-weekly webinars, blogs, podcasts, books & its You tube channel, CREW TV. Calgary Real Estate Wealth also offers, through it's leasing division, CREW Property Services, tenant placement services, ongoing leasing services, and property maintenance and renovations for each property purchased. Real estate investing has never been so easy!
Posted by Calgary Real Estate Wealth on
Leave A Comment