How Does Calgary Keep Housing Affordable and Abundant?
Calgary’s housing market is nearing an unaffordable threshold. However, must homeownership become inaccessible, or is there potential for improvement?
Building Industry and Land Development Calgary Region brought together independent industry experts for a summit, Unlocking Doors: Housing Supply and Affordability Summit, earlier this month to discuss ways to prevent market housing from escaping the reach of would-be homebuyers.
“We’re the second most affordable metropolitan area in Canada. That is great, but that will also draw people here, so we have to redouble our efforts,” says Brian Hahn, CEO of BILD Calgary Region.
Calgary’s housing market has surpassed what is typically deemed as affordable for residents.
The Canada Mortgage and Housing Corporation defines housing as affordable when households dedicate less than 30 percent of their pre-tax income towards covering mortgage payments, property taxes, and utility costs. According to Royal Bank of Canada’s Thought Leadership Series on Canadian Housing quarterly reports, this figure has remained over 40 percent in the Calgary region for the last three years. In contrast, the recent report indicates an overall national average of 58.4 percent during the final quarter of 2024. At the high end, Vancouver stood out with the least affordable market at 92.8 percent, followed closely by Toronto at 70.8 percent. On the more affordable side, Edmonton had the lowest rate among these cities at 33.6 percent.
Although the answer to addressing strong demand and elevated prices may seem straightforward—construct more residences—the actual process of boosting market housing supply and improving affordability encompasses numerous interconnected elements.
“The primary obstacles are the timeframe from excavation to delivery, and costs. Any reduction in time can alleviate expenses, and any savings achieved in costs will also be beneficial,” Hahn stated.
SHORT ON HOUSING
As stated by CMHC, Alberta requires an additional 130,000 homes by 2030 to accommodate the increased demand caused by substantial migration into the province over recent years.
There’s an argument to be made that Alberta’s builders and developers are up to the challenge. The province marked record building starts topping 46,000 in 2024. However, it’s not quite that simple, points out Hahn. Top of mind is the aging skilled labour force.
We must ensure individuals enter sectors with skills that facilitate land development and housing,” Hahn stated. “Vocational trades represent an important area, and we appreciate the provincial and federal governments’ efforts in backing this initiative. However, we advocate for targeted programs aimed at immigrants to guarantee that among newcomers arriving in Canada are those with expertise specifically in construction and residential building.
LAND COSTS
The primary factor pushing Vancouver and Toronto’s real estate markets into unaffordability is the cost of land, according to Wendell Cox, a principal at Demographia, an international public policy firm headquartered in the U.S.
Based on data from Altus and RBC, a pre-pandemic analysis conducted in 2020 revealed that constructing an average-sized 1,500-square-foot home came at comparable costs across different cities: $236,250 for Winnipeg, $247,500 for Toronto, and $303,750 for Vancouver. However, when looking at just the land value required for construction, significant disparities emerged: in Winnipeg, the lot cost stood at $84,050, representing about 26% of the overall expense; whereas in Toronto, this figure rose sharply to $856,600, accounting for around 77%; similarly high levels were observed in Vancouver with land priced at $1,095,950, constituting approximately 78%.
Cox attributes rising land costs to urban growth boundaries. These barriers can be natural features like bodies of water or mountain ranges, evident in cities such as Vancouver and Toronto. Elsewhere, they result from human-made policies limiting expansion and development, often justified by the aim to prevent suburban spread.
“We need to have urban expansion,” Cox said. “The price of stopping sprawl is a loss of housing affordability.”
He commended the City of Calgary for having a legitimate goal of affordability.
“My experience suggests that not many areas have good intentions to try to improve affordability. Supply needs to be affordable and needs to reflect household preferences,” he said.
“We need to restore a competitive market for land and you need densification, but the larger thing is you need urban expansion to keep housing affordability low.”
DENSIFICATION
Salim Furth, a senior research fellow and leader of the Urbanity project at the Mercatus Center affiliated with George Mason University, got a chance to explore one of Calgary’s newest peripheral neighborhoods, known as Mahogany, located in the far southeastern part of the city. He also visited several emerging areas in Edmonton during his trip to the province.
“The expansion observed in Alberta does not constitute sprawl,” he remarks, highlighting that these new developments are designed with high-density communities in mind.
When discussing the densification of older neighborhoods, Furth suggests making sure that the current infrastructure can accommodate it.
He mentioned, ‘A city operates because of its sewer system.’ He also stated, ‘Infill comes at a cost when done extensively — capacity has its boundaries, so understand your limitations.’
FINANCING
Acquiring development land comes at a cost. According to Kevin Lee, the CEO of the national Canadian Home Builders’ Association, exploring alternative funding methods could be beneficial.
Be it MUDs (Municipal Utilities Districts operate independently from city administrations and handle utility services and infrastructure), user charges, or the local tax revenue—where part of this clearly should fall,” he stated. “It’s crucial for us to collaborate in discovering alternative financing methods that avoid increasing costs yet provide a distinct approach to fund public works.
Prime Minister Mark Carney has recognized the expenses associated with land development as a bottleneck issue and is contemplating policies that might reduce the development charges levied by municipalities, according to Calgary Mayor Jyoti Gondek, who questioned where the shortfall would be covered from otherwise.
She called on the creation of a new federal direct-to-industry grant to help land developers offset costs and reduce the burden of costs to tax payers.
“Calgary is no longer able to directly accept federal funding — we know that there has to be provincial involvement. That means there are more steps and people involved in approvals and more red tape at a time we need to be building more homes,” she said, clarifying why direct grants to developers would be most effective.
“We require assistance with the supporting infrastructure necessary for housing expansion. Without water pipelines, wastewater management, public transport, and electrical capacity, progress on housing halts,” she stated.
Alex Ciappara, head economist for the Canadian Banking Association, said it’s important for the financing conversation to move past regulations about individuals qualifying for mortgages and start focusing on better ways to finance housing supply.
“Affordability is about more than demand, it’s about supply on the housing side,” he said. “Land acquisition loans are hard to get.”
RECOMMENDATIONS
Over the next few weeks, BILD Calgary Region will gather insights from this symposium with the aim of improving housing affordability and supply in Calgary.