Annette Anderson, who works as a school librarian, spends over 50 per cent of her income to rent her Calgary home. According the National Bank of Canada, the average rent for a two-bedroom apartment in Calgary and Edmonton has been higher than the monthly mortgage payment for a similar unit.Sarah B Groot/The Globe and Mail
Since 2021, Annette Anderson has rented the main floor of a 1980s home in Beddington Heights, a north-central neighbourhood in Calgary. The three-bedroom unit is spacious enough for her to share with her 24-year-old son, one dog and an elderly cat, but at a rate of $1,880 a month, she spends between 60 and 80 per cent of her income in rent, depending on how much she makes any given month.
“My rent is a good deal, but there’s not very much leftover afterwards for me,” she says, adding that if she could find a place closer to her workplaces, her income would stretch further. “If I could be downtown, I wouldn’t have to drive and pay for gas, [but] it’s really hard to find anything affordable that will accept pets.”
Although Ms. Anderson’s search for a more affordable, pet-friendly place in a central location has continued, the units that suit her family’s needs are hard to come by. “I have notifications from Rentfaster coming into my emails all the time, just in case – and there’s nothing comparable,” she says. “I’d love to live more inner city than Beddington, but it’s very small places for the same [rent] or more.”
Despite the relative affordability of Alberta’s largest cities, renters in Calgary and Edmonton pay more in housing costs than homeowners, despite having a lower average income.
According to a report compiled by the National Bank of Canada, since 2014 the average rent for a two-bedroom apartment in Calgary and Edmonton has been higher than the monthly mortgage payment for a similar unit. By contrast, the opposite happens in Toronto, Montreal and Vancouver, where renting is cheaper than owning.
For single mothers like Ms. Anderson, spending such a large share of her income in rent and transportation means she’s unable to save for a down payment and regain the stability homeownership would buy her.
Since Ms. Anderson moved to Beddington after a divorce, her rent has gone up by roughly six per cent, but she worries this year the increase could be steeper.
Driven by population growth, in 2022 both house prices and rental rates increased in Alberta’s largest cities; a trend that’s expected to continue in 2023.
“We’re still seeing an increase in rents and low availabilities in Calgary,” says Ray Wong, vice-president of data operations at Altus Group. “The shortage of supply is forcing people to rent versus own, pushing up that market.”
And as interest rates continue to climb in 2023, homeownership will not only become more challenging for would-be first-time buyers and drive rents up further, but the development of new supply could be affected too, Mr. Wong says. “What we’re also finding is that the higher interest rates on the investment side [are] also causing more costs to borrow money.”
Despite a record number of purpose-built rental units completed in Calgary last year, according to Altus Group data, the most affordable rents are concentrated in buildings over four decades old, where two-bedroom apartments can be rented for an average monthly rate of $1,487 – an amount that rose by more than 20 per cent in 2022 alone.
But unlike tenants in Ontario and Quebec, renters in Alberta are more vulnerable to market shifts, as landlords can raise rents to capitalize on tight market conditions as long as increases take place only once per year.
For renters who, like Ms. Anderson, earn less than 40 per cent of Calgary’s median income, an affordable rent would be just under $1,000, but the number units in that price range is dwindling.
Recent research shows that between 2016 and 2021, Calgary and Edmonton lost about 2- and 5 per cent of their rental stock priced at or below, $1,000. In the meantime, both cities gained more than 10,000 units each in the $2,000 price range.
In the face of these challenges, last year Calgary created its first housing affordability task force, whose recommendations will be presented to council in June. Similarly, Edmonton has been developing a program to secure affordable housing contributions from new development since 2021, when council repealed the Developer Sponsored Affordable Housing policy, which had been adopted in 2015.
However, the options these cities have at their disposal have been cut short by recent changes to provincial regulation.
Last December, after a successful lobbying effort driven by BILD Alberta, the province suddenly and without consultation removed from the city charters the authority of Calgary and Edmonton to implement inclusionary zoning in these cities.
Inclusionary zoning is a land-value capture mechanism that requires developers to include a percentage of affordable units in residential developments. The application of this tool is supposed to leverage the additional value brought about by upzoning in benefit of the community, and to foster the creation of mixed-income neighbourhoods.
“Part of the solution to making rental housing more available and slightly more affordable, is to require rental inclusionary zoning in any large project,” says David Hulchanski, a professor of housing and community development at the University of Toronto. “As long as it’s applied across the board, it’s just part of the rules of the development game.”
But despite the potential benefits inclusionary zoning could have in a tight rental market, Alberta developers have characterized this mechanism as a hidden tax without proven benefits.
“Inclusionary [h]ousing taxes housing to pay for housing, without a demonstrated history of addressing the long-term housing needs of Alberta’s most vulnerable,” a BILD Alberta spokesperson told The Globe and Mail in an e-mail.
While inclusionary zoning is no silver bullet, it is one of many tools cities can take to increase their supply of affordable housing, along with upzoning, non-profit housing development, and preventing the loss of naturally occurring housing.
“Inclusionary zoning alone will never decrease the deficit sufficiently, nor will it provide enough affordable housing for a growing population,” says Carolyn Whitzman, an adjunct professor at the University of Ottawa, noting that this tool works well in Montreal because 20 per cent of all private development goes to social housing, whether in the form of units, land, or money.
Since Montreal adopted inclusionary zoning in 2005, more than 44,000 affordable units have been created.
A similar approach in Alberta could improve the chances lower income renters like Ms. Anderson can find a suitable place in amenity-rich, central neighbourhoods, as Calgary and Edmonton have some of the lowest rates of non-market housing units per 500 residents in Canada.
As the affordable housing shortage intensifies in both cities, however, that alternative has been taken off the table.
According to Chris Ollenberger, a Calgary-based developer, one of the reasons some developers oppose inclusionary zoning is that the cost of including affordable units in a project isn’t offset by the profits, but by homebuyers themselves.
“So all you’re doing is basically taking the cost that would be on 10 or 15 units, and the other 85 are paying for it,” he says. “So it’s just a bit of a money shift.”
And when additional costs are transferred to the remaining market units, these become more difficult to sell. “All of a sudden you’re narrowing out the market, because a lot of developers want to go into the broadest market as possible.”
While BILD Alberta has stated its commitment to collaborating with the province and find “alternative solutions to issues of housing affordability,” it is in the name of affordability that this organization has also voiced its opposition to the levies developers pay cities to fund the infrastructure required to support the suburban neighbourhoods they build.
As a provincial election looms, the Alberta government seems to be responding to the most influential voices – and leaving lower income Albertans behind.