Despite elevated inventory levels in the city of Calgary, starts activity improved in 2019 due to multi-family construction. Much of the growth came from the multi-unit segment, with a focus on lower-priced units and rental options. The added competition from the new home market will likely continue to weigh on resale prices until the supply demand balance adjusts to a lower range.
Driven by higher barriers to ownership, international migration and economic uncertainty, rental activity has been improving. Vacancy rates have eased and landlords are offering fewer incentives. Also, given the challenges now facing new-home builders with condominium sales, some are choosing to shift directions toward more purpose-built rental.
The reductions in vacancy rates will help contribute to reductions in housing supply levels. However, unless we start to see more notable shifts in rental rates, or the rent-versus-ownership equation improves, it is unlikely that we will see significant shifts in the ownership market this year.