According to the report by David Macdonald & Ricardo Tranjan titled "Can't afford the rent" and the latest statistics on the so-called "rental wage," the Canadian real estate market is facing a significant challenge concerning the affordability of rental properties across the entire country. The concept of rental wage is an excellent instrument to demonstrate the balance between the cost of rent and wages based on the minimum wage.
Currently, Calgary ranks 7th in terms of rent affordability, with Vancouver being in first place, followed by Toronto. To afford a 2-bedroom rental apartment in Calgary, one has to make $29.51 per hour and work 102 hours per month. The rising concern about housing affordability has led to tenant organizations protesting against abusive rent increases, while the Bank of Canada's raised interest rates are affecting both mortgage holders and tenants. Political parties are also addressing the escalating cost of housing.
The article introduces the concept of "rental wage," which refers to the hourly wage a full-time worker needs to make to afford a two-bedroom apartment without spending more than 30 percent of their income on rent.
Past and Current Calgary Development Trends
Calgary's residential real estate development strategy had long focused on constructing single detached houses in new communities, expanding the city limits in all directions. On the other hand, the infrastructure that followed the city's expansion plans was carefully thought out, including the construction of new roads such as Stoney Trail, upgrades to Glenmore Trail, Sarcee, and others, which become the main arteries for the community, benefitting residents of new districts. Calgary's economy and infrastructure are continuously evolving, which is a positive sign. The challenge urban planning faces right now is how to carefully balance the building density and increase the number of properties, and affordable real estate. The increasing migration to Calgary also accelerates additional challenges to rental affordability and real estate supply.
One of the strategies that the City of Calgary is implementing is Office to Residential conversions, especially in the Downtown area. This strategy solves several challenges: firstly, it doesn't increase building density but utilizes old and vacant office buildings that are at the end of their lifespan. Secondly, the construction vibrancy picks up momentum, which drives city investments and prosperity. Thirdly, the much-needed supply of new rental properties will be available to residents and newcomers, hopefully balancing rental wages across the city. There are more pros to this strategy, such as the increasing quality of rental properties, vacant office buildings that previously created whole blocks of dead deserts in the Downtown area beginning to take on new life, and supporting businesses like coffee shops, stores, flex spaces, new daycares are opening, creating more work opportunities and keeping the economic cycle turning.