The Impact of Staggering Population Growth on Calgary's Housing Market in 2023

by Benjamin Sweet

Calgary, Alberta, is experiencing an unprecedented surge in population growth in 2023. This rapid increase in residents has significant implications for the city's housing market. In this blog post, we will explore the latest population statistics, analyze the effects of this population growth on the housing market, and discuss the challenges and opportunities it presents for current homeowners, potential buyers, renters, and landlords in Calgary.

The Rapid Rise of Calgary's Population in 2023

Calgary has long been known as a vibrant and prosperous city, attracting individuals from various parts of Canada and the world. However, in recent years, the population growth has reached new heights. According to the City of Calgary report, Calgary recorded the most significant level of demand for housing in 2022 since data collection began in 1990. The reasons behind this surge in population include net migration, employment opportunities, and wage growth.

Statistics Canada reports that in 2022, Calgary's population saw a substantial increase. It consisted of 10,916 interprovincial migrants to the Calgary census metropolitan area and nearly 30,000 international migrants. In 2022, Alberta’s population grew by 164,793 people, whereas the number of new homes built and new housing available stood at 29,837. A very large gap, the largest ever recorded.

According to recent reports, Alberta is currently witnessing the most rapid pace of population growth in 50 years. The province's population has been increasing at an average rate of 2.4 people per year for every new home built between 1973 and 2022. However, in 2022, this ratio skyrocketed to 6.2 people per new home, setting a new record. The gap between the number of homes available and the number needed has never been wider, creating a severe housing shortage in Alberta.

The Housing Market Challenges Faced by Calgary

As the population continues to grow, Calgary's housing market faces significant challenges. The City of Calgary report highlights the lowest inventory levels since the boom times of 2006, resulting in limited choices and higher prices for potential homebuyers. While Calgary has a steady supply of new housing, primarily in new communities on the outskirts of the city, the demand is outpacing the supply.

Calgary, as the largest city in Alberta, is at the epicenter of this population-driven demand for housing. While other markets in Western Canada have seen a decline in housing prices, Calgary has remained relatively stable, with only a 5% decrease from its peak during the pandemic and a 23% gain compared to pre-pandemic levels. This resilience can be attributed to the influx of migrants into the city, attracted by the relatively lower cost of living, including housing.

Calgary's Housing Market Performance

In Calgary, townhomes and apartments have seen steady growth, while detached homes have maintained stability. The average housing price in Calgary is $506,400. This stability in prices despite the population growth can be attributed to the high demand and limited supply of housing options. The market dynamics favor sellers, as buyers face limited choices and rising prices.

The demand for townhomes and fourplexes in older communities, where there is a shortage of "middle housing," has led to an increase in construction. Builders are meeting buyers' specific demands by offering floor plans that include legal basement suites and constructing net-zero show homes, not just to meet current demand but also to lead the industry in energy-efficient solutions.

The high cost of housing in Calgary has also affected the rental market. Rental prices have increased significantly, with a one-bedroom apartment in Calgary seeing a more than 20% increase in December 2023 compared to the previous year. The strong population growth, coupled with suppressed first-time homebuying activity, has contributed to the demand for rental properties. However, the anticipated high number of rental completions in 2023 is expected to temper further rent increases.

The Role of Policymakers in Addressing the Housing Crisis

With the increasing population and growing demand for housing, policymakers at all levels of government are under pressure to respond effectively. However, it is crucial to focus on closing the gap between supply and demand rather than implementing short-term solutions that may exacerbate the problem. Introducing tax subsidies for first-time homebuyers without increasing supply or implementing restrictive rent controls can have unintended consequences.

The City of Calgary plays a significant role in creating the regulatory environment for the development industry to cater to specific demands. Changes to Calgary's Land Use Bylaw, such as allowing for the construction of more rowhouses and townhouses in established areas, reflect the city's commitment to fostering housing diversity. Developers are responding to the demand for "middle housing" by focusing on building townhomes and fourplexes in older communities.

The Impact on Homeowners, Homebuyers, Renters, and Landlords

The population growth in Calgary has implications for various stakeholders in the housing market. Current homeowners may benefit from the increased demand, resulting in potential appreciation of their property values. On the other hand, potential homebuyers face limited choices and the challenge of higher prices. Renters may also feel the pinch as rental prices increase due to strong population growth and limited rental supply.

Landlords, while potentially benefiting from increased rental demand, must also navigate the changing landscape of tenant preferences and affordability. It is crucial for landlords to stay informed about market trends and be mindful of the rules and regulations governing rental properties.

Looking Ahead: Balancing Supply and Demand

As Calgary's population growth shows no signs of slowing down, it is essential to strike a balance between supply and demand in the housing market. The City of Calgary, developers, and policymakers must work together to ensure a diverse range of housing options that meet the needs of the growing population. This includes not only building new homes but also preserving affordability and addressing the financialization of real estate.

Calgary's housing market is at a critical juncture, and the decisions made today will shape its future. While challenges exist, the city's resilience, commitment to housing diversity, and innovative approaches to energy efficiency provide hope for a sustainable and inclusive housing market.

As a Realtor® in Calgary with Real Broker, I am dedicated to helping clients navigate the dynamic housing market and find the best solutions that align with their needs and goals. Whether you are a homeowner, homebuyer, renter, or landlord, it is crucial to stay informed and work with experienced professionals to make informed decisions in this rapidly changing environment. Let's find your dream home or investment property in this exciting and evolving city!

If you’d like more information about the Calgary Real Estate market, check out our website to browse AllCalgaryListings. For more personalized guidance, feel free to reach out to us by either filling out the contact form below, or visit our Contact Us page. You can also reach out to me, Ben Sweet, directly at +1 (403) 774-7447. If you’re still not convinced, check out our Rave Reviews to see what our past clients have to say about their experience working with us. We look forward to speaking with you soon!

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