Anila Lee Yuen, president and CEO of the Centre for Newcomers in Calgary, says the potential for home ownership draws people to the city.Jude Brocke/The Globe and Mail
Due to its relative affordability and perceived abundance of tech jobs, Alberta’s largest city is becoming a magnet for immigrants.
In 2022, Calgary welcomed 25,622 international migrants, a record number that represents about 60 per cent of the city’s total population growth.
But as the number of immigrants increases, so do the pressures on Calgary’s rental market. Unlike interprovincial migrants, international migrants are more likely to become renters, at least initially.
“You can’t buy a home if you don’t actually have a job,” says Anila Lee Yuen, president and CEO of the Centre for Newcomers in Calgary, adding that home ownership is still one of the main reasons newcomers choose Calgary over other Canadian cities.
“People are coming to Calgary, and smaller centres like Red Deer and Lethbridge, because they’re able to find employment and eventually buy a house.”
Home ownership, however, is becoming harder to attain in Canada – and Calgary is no exception.
According to Ray Wong, vice-president of data operations at Altus Group, “with the slowdown of the market [and] rising interest rates, people can’t afford to make room for immigrants and buy a home – they have to rent for now.”
As a result, rental vacancy rates have dropped from 3.03 per cent at the end of 2021, to below 1 per cent in the first quarter of 2023, according to Altus Group data.
“It takes time for new immigrants to get settled,” Mr. Wong says. “They have the same challenge as people that live in Canada already – that there’s just nothing available.”
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But demand for rentals isn’t distributed evenly across segments.
In October, Canada Mortgage and Housing Corporation (CMHC) reported rental availability was concentrated in units leasing for at least $1,500 per month. While at the higher end of the market the vacancy rate of purpose-built rental units was roughly 6.3 per cent, a 0.3-per-cent increase over the previous year, vacancy in the most affordable segment fell from a rate of 5.5 per cent in 2021, to 1.7 in 2022.
Zonda Urban, an analytics company that tracks data for more than 17,000 recently launched purpose-built rentals in the Calgary region, recorded a vacancy rate of 4.8 per cent at the end of last year. (Notably, areas with the lowest average net rent per square foot – $2.50 per square foot or less – also had the smallest number of units released.)
The disparities between vacancy rates at each end of the market pose an additional challenge for recent newcomers, many of whom are unable to afford Calgary’s median market rent of roughly $1,300 per month.
Chitransha Mishra arrived in Calgary from India on a frigid mid-February day. Her eight years of experience in marketing for startups in Bangalore, a city often characterized as “the Silicon Valley of India,” earned her a nomination to immigrate to Alberta, as her qualifications are in high demand in the province’s burgeoning tech scene.
While searching for a permanent place to rent, Ms. Mishra stayed for 10 days in an AirBnB in Northeast Calgary. Without a job lined up, however, finding an apartment she could afford close to downtown proved a challenge.
“I saw a bunch of places, but some of them were out of my budget [or] really far from downtown,” she says, emphasizing her preference for a central location.
Unable to find an apartment within her budget in her preferred locations, she settled for a room in a shared house near the University of Calgary, in the city’s northwest, where she pays $650 per month, utilities included, and has easy access to public transit.
Until she finds a job, however, Ms. Mishra won’t be able to afford to pay more in rent.
“I was lucky in a sense, [because] I didn’t struggle a lot in terms of finding the house,” she says. “But it was not my first choice.”
Ms. Mishra’s situation shows that despite the completion of nearly 20,000 purpose-built rental units in the last decade, the housing needs of new immigrants remain unmet in Calgary.
Employment barriers, such as Canadian experience and credentials, mean many newcomers remain underemployed in low-paying occupations, which limits the housing options available to them.
According to Ms. Lee Yuen of the Centre of Newcomers, the consequences of underemployment are more significant for those immigrants who require a larger home.
“Within the inner city, there isn’t that much housing that can support a large family,” she says. “So they have to move to the suburbs, where you don’t have appropriate transit.”
In Calgary, three-bedroom units represent only seven per cent of the purpose-built rental universe. And even though roughly three in five units this size are located in older buildings at the lower end of the market, rents in central, amenity-rich neighbourhoods remain unattainable for newly arrived immigrant households.
Recent immigrants earn an annual median income of $28,100 in Alberta, an amount insufficient to afford Calgary’s monthly median rent of $1,500 for a three-bedroom apartment, as this would require a household income of $60,000 to be considered affordable.
But some are taking notice of this challenge.
Last spring, Maxim Olshevsky, managing director at Peoplefirst Developments, announced the conversion of a downtown office building into 112 two- and three-bedroom residential units – and 40 per cent of these apartments are to be rented below the area’s median market rate of $3,098.
“When I was designing the floor plate, I really wanted to focus in on more, larger three- to two-bedroom suites and accommodate families,” Mr. Olshevsky says, pointing at his own experience living in a crowded apartment when his family immigrated to Calgary from Ukraine in 2000.
“Affordability is quite an important factor, because, how do you justify a family paying $3,000 for a three-bedroom apartment without [in-suite] laundry?”
This building’s conversion is partially enabled by of the City of Calgary’s downtown development incentive program, which grants up to $75 per square foot to convert office space into residential.
When completed this fall, this project will add 84 two-bedroom and 28 three-bedroom apartments to Calgary’s rental stock, with rents starting at $1,600 per month.