Calgary Rental Market Update: Submarkets Show Signs of Slowing Down – August 2, 2024
As the summer of 2024 unfolds, Calgary's rental market is experiencing notable shifts, raising eyebrows among property managers and tenants alike. A close look at the latest data reveals trends that suggest a cooling off in several submarkets, with a surge in available rental listings being the most striking indicator.
Surge in Rental Listings
The number of rental listings on Rentfaster has skyrocketed to approximately 6,300, up from around 4,000 just six months ago. This 57% increase in listings is a crude yet telling indicator of the market dynamics. Such a significant jump in combination with so many properties being available immediately suggests that supply is outpacing demand, a trend that could signal rising vacancy rates in the near future.
Property Managers and Immediate Occupancy
About 15% of these listed properties are managed by property managers, reflecting the ongoing professionalization of the rental market. This is a crucial aspect, as professionally managed properties often come with stringent tenant screening processes, maintenance protocols, and more stable rental agreements.
Moreover, a substantial portion of the current inventory is listed for immediate occupancy. This is another strong indicator that vacancy rates are on the rise. When landlords and property managers are eager to fill units quickly, it often means there is more supply than demand.
Vacancy Rates on the Rise
The Alberta Rental Market Report from the Canadian Mortgage and Housing Corporation (CMHC) for the first quarter of 2024 already hinted at a slight uptick in vacancy rates, inching up to 3.8% from 3.5% in the previous quarter. Given the current trends, this rate is likely to continue climbing. Historically, Calgary has seen a cyclical rental market heavily influenced by the ebb and flow of the oil and gas industry, among other economic factors.
Rental Prices and Incentives
Despite the increasing vacancy rates, average rental prices have remained relatively stable, with a one-bedroom basic apartment averaging around $1,250 per month and a two-bedroom at $1,500. However, property managers and landlords are becoming more creative with incentives to attract tenants. Common incentives include offering one or two months of free rent, reduced security deposits, and free parking. However, we believe other strategies are more effective in the long term.
Submarket Analysis
Different submarkets within Calgary are experiencing varying degrees of this slowdown. For instance, the downtown core and Beltline areas, typically hotbeds for young professionals, are seeing a more pronounced increase in listings not to mention the number of new purpose-built buildings that have added to the supply. This could be attributed to the ongoing shift towards remote work, which reduces the need to live close to office spaces. Conversely, suburban areas with larger homes and more green space continue to see relatively stable demand, driven by families and individuals seeking more spacious living environments.
A unique property, not commonly available for lease, will command rents that fall outside typical rental prediction algorithms. A unique property may include a executive 5+ bedroom new/updated home in communities such as Mount Royal, Britannia and in other communities with a particular locational advantage, and/or a penthouse style condominium in a desirable community. Call Citysearch who specializes in these hard to find properties.
Economic Influences
The broader economic landscape also plays a pivotal role. Calgary's economy is gradually recovering, but the pace is uneven. While the tech and healthcare sectors are growing, the oil and gas industry, a traditional pillar of the local economy, remains volatile. This economic uncertainty can lead to cautious consumer behavior, including renting rather than buying homes, but also a reluctance to move without compelling reasons.
Looking Ahead
As we move into the latter half of 2024, stakeholders in Calgary's rental market should keep a close eye on these evolving trends. Property managers might need to adopt more flexible leasing strategies and offer competitive amenities to stay ahead. Tenants, on the other hand, could find themselves in a more favorable position to negotiate terms and find better deals.
In conclusion, while the current surge in rental listings and the trend toward immediate occupancy suggests a cooling market, the stability of rental prices and the varying dynamics across submarkets present a complex picture. For both property managers and tenants, staying informed and adaptable will be key to navigating Calgary's rental market in these changing times.
