Housing starts in Calgary on track to set new record

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Call it the big boom. For the third year in a row, Calgary’ new homes market is on pace to set a record for housing starts in 2024.

Canada Mortgage and Housing Corp. released its latest numbers for Calgary in late August showing that the city had seen more than 13,650 starts year to date ending July 31, an increase of 40 per cent year over year.

The city is on pace for 23,000 starts by year’s end, “which would be very, very significant historically,” given it would be substantially higher than the previous record of 19,579 set last year, says lead economist Taylor Pardy with CMHC.

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Driving the boom in new homes development has been a lack of supply, which has been tight since the pandemic. High demand, driven by a strong economy and record migration — especially from more expensive housing markets like Toronto and Vancouver — have drawn down inventories in both Calgary’s resale and new homes markets.

At first, demand surged for single-family detached homes, but that changed amid higher interest rates for mortgages and higher average prices for homes.

The average price for a new single-family home in July was $849,994, up more than five per cent from the same month last year. Overall, single-family home starts were up 30 per cent in July year over year. Pardy says that indicates the industry still sees strong demand for the housing type, even amid higher prices.

Yet Calgary has seen even more activity in the multi-family side of the market. While supply is less than two months of demand overall in the city, Pardy notes that semi-detached and townhome inventories are closer to one month of demand.

“It’s a level of tightness in the market that we haven’t seen since the mid-2000s,” he says.

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“We’re seeing builders really respond, and so starts — across the board — have increased significantly.”

Condo apartments have seen the most significant jump with more than 3,400 starts year to date, an increase of 122 per cent year over year.

“This is a trend that has come about especially in the higher interest rate environment for mortgages,” Pardy says.

“Multi-unit segments over the past two years have become a lot more popular and that is due to that price-point factor.”

The rental side has seen nearly the same level of activity with about 3,200 starts, though only a 20 per cent year-over-year jump.

One key tailwind for development in the city has, in fact, been a CMHC funding initiative, the MLI Select program, says local realtor Justin Warthe, with Re/Max House of Real Estate.

“The MLI Select program is designed to incentivize the construction of energy-efficient and accessible rental housing,” he says. “These incentives are critical for developers looking to create sustainable and affordable multi-unit residential properties, which aligns with the growing demand we’re seeing in the Calgary market.”

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Yet even with the surge in activity, housing remains in short supply, he adds.

MLI Select addresses more immediate housing demands, particularly for newcomers to the city who often rent before buying. As well, rentals remain in high demand among would-be first-time buyers who now are renting longer as they save for a down payment and grapple with a higher interest rate environment.

“From the resale market perspective, there’s a notable demand for properties that offer both value and functionality, reflecting a broader market trend where buyers and renters are prioritizing quality, efficiency and affordability,” Warthe says.

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