The rental market in Calgary is expected to stay more or less the same in 2021, while asking rents in other Canadian cities could increase by up to 6% by the end of the year.
In Rentals.ca’s 2021 rental report, the results assume that rental prices could fall even further in the first four to five months of 2021, but could then rise in large parts of the country towards the end of the year.
Average rental rates could rise 3% over the course of the year, according to the report, which gathered insights from real estate experts across the country. Asking rents are expected to rise 4% in Toronto, 6% in Montreal and 3% in Vancouver, while remaining unchanged here in Calgary.
Based on a report by Canada Mortgage and Housing Corporation released in January, the average rental cost for a one-bedroom apartment in Calgary is $ 1,087 per month. Two bedrooms are the most expensive option, with an average rent of $ 1,323.
The city’s vacancy rate has increased, with downtown Calgary seeing the largest increase in vacancies at 8.8% last year, compared with 3.4% in 2019.
Rental demand has declined due to a combination of the economic impact of the pandemic, the loss of jobs in the oil sector and the border closure resulting in restricted immigration.
A sustained increase in rental supply with a steady pace of completion of rental properties in 2020 with an increase of 3.2% has also contributed to the lower demand.
“45% of the increase in rental supply in 2020 was in downtown and the northwest, which is where 26.7% of the main rental properties in Calgary are,” explains Rentals.ca. “The Southeast also recorded an 11.5% increase in rental supply this year. and comprises 6.2% of the main Calgary rental offering. “
The average rental in Calgary rose slightly to $ 1,195 as homeowners do not use pricing measures to compete for tenants, with incentives like free utilities, lower deposit fees, and cash rewards.
Calgary’s 2021 Rental Market Forecasts
Andie Daggett, vice president of sales and customer experience at Urban Analytics, doesn’t expect any major changes in the Calgary rental market until at least the third quarter of 2021.
“Rents will remain stable through the first half of 2021 as owners and developers continue to control current tenant economic conditions,” predicts Daggett.
However, the introduction of the COVID-19 vaccine can have a positive impact on the economy and enable more job opportunities and job stability. This, in turn, could lead to an influx of qualified tenants, meaning that owners and developers could start rising rents in the second half of 2021.
Many new rentals in 2020 offered “month-long” incentives or reduced monthly rents, causing older and suburban buildings to compete with these recently completed projects.
Daggett expects this type of incentive to remain in place through 2021. “It would be very difficult to remove an incentive for rental prices,” she says, “without running the risk of tenants moving out because they can no longer afford their rent.”
Another trend that could continue this year is virtual tours. “They take less time and are easier for both parties to organize: leasing agents can see more units and tenants can see more buildings, which speeds up the application and lease signature process,” says Daggett. “They are a win-win situation for both parties.”
If tenants don’t have to return to their downtown offices, they can also be more flexible in the area of the city they live in and choose to live in larger or cheaper spaces outside the city center.
Rentals.ca said rental properties in the urban core of Calgary have become increasingly competitive and will likely remain so for the foreseeable future given the amount of real estate products planned for these areas.
“Developers should consider opportunities in underserved areas,” says Daggett, “like more established inner-city suburban communities.”