Calgary housing starts are strong and, for various reasons including consumer demand, Calgary’s multifamily housing is hot.
According to BILD Calgary Region, the recent CMHC Housing Starts and Completions report showed the Calgary and the Calgary Metropolitan Area had strong housing start and completion activity last year.
From January 1 to October 31, 2024, 16,583 housing starts were recorded in Calgary, nearly surpassing the prior record-breaking year with two months to go. CMHC data also showed a 24 per cent YTD increase in housing starts and a 62 per cent increase in housing completions. The report notes the strong collaboration with and support from all the regional municipalities, including The City of Calgary and Airdrie, Chestermere, Cochrane, Foothills County, High River, Rockyview County, Okotoks and Strathmore.
It wasn’t long ago that Calgary experienced a highrise condo boom. Stats and trends show that things have changed.
The supply and demand for rentals, caused primarily by the influx of interprovincial migration and immigrants, was a broadside for Calgary’s housing stock. Last year, according to stats, Calgary vacancy rates were at the lowest level in a more than a decade. The Re/Max 2024 Commercial Real Estate Report tracked that purpose-built Calgary rental development starts overtook condominium starts.
For builders and consumers, the Calgary multifamily market is booming.
Multifamily construction is popular because it provides a cost-effective way to address the growing housing demand, particularly in urban areas like Calgary, by allowing developers to build more units on a smaller footprint, making housing more affordable and accessible to a wider range of people while also generating a steady income stream for property owners through multiple rental units.
This is especially relevant now in the urban Calgary real estate market, where land is scarce and the need for dense housing is high. “Multifamily has become so popular in Calgary due to the fact that most the other type of real estate assets (investments) have slowed down and became less attractive,” explains Ash Mahmoud, the respected president of Cairo Development. “There is also more stability and sustainability on the multifamily business, as the gap between the supply of multifamily units and the demand have increased significantly.
“Especially when COVID which affected the supply of multifamily units which increased the gap even more, triggered many investors and developers to switch from single home or infill developments to multifamily.”
According to Brian Hahn, CEO of BILD Calgary Region, “Calgary homebuilders have been highly responsive in delivering a diverse range of innovative housing options to supply the demand across the entire housing continuum, although multifamily housing offers a more attainable entry point for some first-time homebuyers and for renters. “Changes to mortgage rules, such as the recent increase in the CMHC insured mortgage maximum amortization period for first-time buyers, from 25 to 30 years, has also helped with attainability. From a planning perspective, multi-family developments provide a more compact way to meet the growing demand for housing.”
He adds that multifamily developments have also been key in shaping many of Calgary’s new master-planned communities, which offer a range of housing options – from single-detached homes to row and apartment-style units. “Those communities also feature amenities like local restaurants, fitness centres and other attractions, making them appealing to a broad spectrum of buyers and renters.”
There are several reasons why multifamily construction is also popular with Calgary developers and builders.
High housing demand. With rising housing costs and a growing renter population, multifamily units offer an affordable option for many people, especially in urban areas where single-family homes are often out of reach.
Land efficiency. By building upwards instead of outwards, multifamily developments can maximize the use of available land, making it suitable for densely populated areas.
Urbanization. As more people move into Calgary, the urban areas are becoming increasingly dense. This density necessitates efficient use of space, making multifamily housing units an essential solution to accommodate Calgary’s growing urban population.
Economic Factors. The rising cost of Calgary’s single-family homes has pushed many towards more economically viable living options. Multifamily housing often provides a more affordable alternative, allowing individuals and families to live comfortably without the financial burden associated with single-family homes.
Economies of scale. Constructing a single large building with multiple units can be more cost-effective than building several individual houses, resulting in lower construction costs per unit.
Consistent income stream. Property owners can generate a reliable income from multiple tenants within a single building, providing greater financial stability compared to single-family rentals.
Amenities and community building. Multifamily complexes often offer shared amenities like pools, fitness centres and common areas, fostering a sense of community among residents.
Despite the popularity and demand for multifamily housing in Calgary, like most aspects of residential construction, there are speedbumps and challenges for builders and developers. “Building a high-rise, especially with today’s concrete costs, have become dramatically more expensive (almost $100 per square foot) than typical wood frame six-storey multifamily buildings,” Mahmoud points out.
“And when it comes to multifamily construction versus single family, a common challenge for developers of wood frame four- to six-unit multifamily housing is the ability to handle the required parking ratio for development and the mix between surface parking and the parkade. Depending on the area and the parking rental rates per stall per month, if every underground parking that is built cannot be rented for an average $150 per month, the developer is losing money,” he notes.
No doubt about it. Red tape and costs are familiar speedbumps for Calgary housing starts.
“Taxation is a factor which impacts affordability across the entire housing continuum,” Hahn says. “From a development and home affordability perspective, taxation includes development charges (off-site levies), permit fees, all forms of value added taxes and the typical taxes faced by all enterprises and individuals. The principal challenges for developers and home builders of all products, including multi-family, are fundamentally time and resources.
“BILD Calgary Region continues to collaborate and work with municipal, provincial and federal regulators and other stakeholders to lower barriers and streamline the cost-effective, timely addition of housing supply while addressing these challenges.”
He emphasizes that, whether multi or single-family housing, there are factors which are critical to attracting private investment in development. Factors such as a predictable development and housing regulatory regime, a competitive development charge and permitting fee structure and full transparency in terms of the determination of charges, fees and changes/updates to the regulations.
All orders of government have placed a priority on home affordability. As the Canadian Home Builders’ Association emphasizes, “Supply is the key that unlocks home affordability.”
Builders and developers are positive and upbeat about Calgary’s hot multifamily trend, and cite several factors for the popularity and demand for multifamily. Ash Mahmoud mentions CMHC’s MLI Select program, allowing builders to get financing with only a five per cent down payment providing the new build, or renovation on an existing building, meets certain affordability, accessibility and climate compatibility metrics.
“Although building a fourplex or adding an extension or a suite into an existing single-family house is nothing new, building a multifamily with five units or more qualifies for CMHC’s program offering 95 per cent financing,”
Another significant reason for the popularity of multifamily are recent changes to Calgary’s zoning bylaws, allowing for higher density housing in typically single-family detached home neighbourhoods.
Calgary builders, developers and market analysts agree. For the foreseeable future, Calgary’s multifamily construction trend will continue.
