CMHC Calgary Property Market Outlook – Balancing Growth and Emerging Challenges
The Canada Mortgage and Housing Corporation (CMHC) has released its 2025 Housing Market Outlook, providing insights into Calgary's real estate trends. The report highlights a dynamic interplay of factors influencing the city's housing market, including population shifts, construction activity, and rental dynamics.
Migration and Housing Demand: A Lower Growth Future
Calgary has experienced robust population growth in recent years, bolstered by interprovincial migration from more expensive urban centers like Toronto and Vancouver. While federal policies are expected to slow international migration, Calgary's relative affordability and economic opportunities continue to attract internal migrants, sustaining housing demand.
Changes in international migration policies, while having a less direct impact on the resale market compared to the rental sector, will nonetheless be felt in Calgary, a favoured destination for many new arrivals. It is expected that Toronto and Vancouver will be hit harder by limits and constraints on immigration. Still, adjustments to immigration targets and a slowing of interprovincial migration, will exert a dampening effect on overall housing demand. This demographic shift presents a significant challenge to the market's long-term growth prospects.
RBC: The federal government’s plans to reduce new arrivals are expected to essentially wipe out all previously expected population growth in years ahead. While the final impact on population is yet to be known, the direction will be lower, turning demographics from a tailwind to a headwind. link
Rental Market Dynamics: Rising Availability
In the CMHC’s December 2024 Rental Market Survey, Metro Calgary’s rental vacancy rate was 4.8%, up from 1.4% a year ago. 3 to 5% is considered a ‘normal’ vacancy rate, so the rental supply was very tight, and now renters have a choice. Rents have been falling.
The purpose-built rental sector in Calgary witnessed an unprecedented expansion of approximately 10% in 2024, as reported by CMHC's Rental Market Survey. This surge in supply contributed to a significant rise in the vacancy rate, escalating from 1.4% in 2023 to 4.8% in 2024. The trend of increasing rental stock is anticipated to persist, leading to further elevations in vacancy rates and flat or negative rent growth. Elevated vacancy rates and slower rent growth may influence the condominium market, potentially reducing the number of units utilized as rental investments, especially as demand in the resale market strengthens.
Resale Market Activity
While 2023 and 2024 were shy of the frenzied pace of buying in 2022, they were strong years. The resale housing market in Calgary is projected to see a modest uptick in activity in 2025 due to lower mortgage rates, continued population growth, and economic growth.
House prices are expected to rise modestly due to constrained inventory. However, condo apartment inventory has tripled since mid-2024. Perhaps rental investors are attempting to cash in their gains since rents are falling.
If apartment inventory continues to rise, it may lead detached house prices and condo apartment prices to head in opposite directions. Widening the gap between the rungs in the property ladder.
Pre-sale and New Construction Trends
Calgary reached a record-high level of new construction in 2024 for the third consecutive year. Factors such as recent and anticipated price growth reduced financing costs, and supportive municipal policies have sustained elevated construction levels. Notably, in November 2024, adjustments to Calgary's service plan and budget were approved to support housing, land use, and local planning investments, facilitating the development of new communities and redevelopment in older neighbourhoods.
Despite these positive indicators, a combination of slowing demand growth, falling rents, and the impact of increased apartment supply is expected to prompt developers to exercise caution, leading to a slight moderation in new construction activities. Expect lower pre-sales and housing starts.
Conclusion: Moderation
CMHC's 2025 outlook for Calgary's housing market suggests a period of moderation and stabilization. While population growth is expected to decelerate due to policy changes, internal migration continues to support housing demand.
The resale market is poised for a modest uptick, and new construction activities are likely to adjust downward in response to evolving market conditions.
The rental market is transitioning towards higher vacancy rates and tempered rent increases, reflecting the substantial influx of new units. Buyers and sellers in Calgary's real estate sector should remain attentive to these developments, balancing optimism with caution in their strategic planning.
