Calgary’s condo market continues to evolve as economic shifts, urban revitalization, and demographic changes impact housing demand across the city. What has remained consistent, however, is the potential for the condo market to help address affordability challenges for many home buyers, especially as the population continues to grow, and for it to provide investors with ample opportunities for revenue properties. 

As 2025 begins, many people, from first-time buyers to seasoned investors are closely analyzing the dynamics shaping Calgary’s condo sector to make informed decisions. 

Current Market Snapshot

Calgary’s real estate market exhibited remarkable resilience through 2024, with the condo segment playing a pivotal role in sustaining housing availability amidst affordability concerns. The benchmark apartment price stood at $337,800 in November 2024, according to the Calgary Real Estate Board, representing a 9% year-over-year increase, offering affordability as well as the potential for appreciation. The year-over-year benchmark price was $336,527, showing an even more impressive 16% increase. 

Inventory growth has been a key market development. As of December 2024, condo listings rose to over 4,300 units; however, inventory levels still remain below long-term trends for the month. Condo sales continued to perform well, particularly in urban centers, demonstrating a continuing value within Calgary’s housing ecosystem.

Jesse Davies, leader of the Jesse Davies Team with Century 21, and a certified condo specialist, further notes, “Increases in supply vary significantly by location and price range, meaning that condos in popular areas, and those within key price brackets, remain in high demand.”

While there was a decline in condominium apartment sales in 2024, the numbers were still 47% higher than historical norms, reflecting their continuing role in offering accessible housing and investment options.

Key Trends Shaping Calgary’s Condo Market Going Into 2025

Affordability and Market Access

Affordability remains a pivotal driver of Calgary’s condo market. As the benchmark price for detached homes has reached beyond $750,000, condo apartments provide a crucial alternative for first-time buyers and younger professionals unable to afford single-family homes. With apartment benchmark prices in November 2024 at $337,000, the condo market has become one of Calgary’s most accessible options. However, entry-level condos, priced at $300,000 or less, are particularly scarce and in demand. 

Federal and provincial initiatives aimed at assisting first-time homebuyers, such as the new First Home Savings Account (FHSA) announced in 2023 and the Registered Retirement Savings Plan (RRSP) program for first-time home buyers, help to offset borrowing costs. With the recent addition of the FHSA, more households who were at a tipping point are reconsidering moving away from renting and into entry-level homeownership. 

Strong Rental Demand Driving Investment Opportunities

Calgary experienced record population growth in 2024, with an increase of 4.9% as of April 1, compared to the previous year, according to data from the City of Calgary. This surge in population has led to heightened demand for housing, particularly in the rental market, which has created significant opportunities for property investors.

The Canada Mortgage and Housing Corporation (CMHC) reported in October 2024 that Calgary’s apartment rental market had a vacancy rate of 4.8%. The average rent for apartments reached $1,732, with a median rent of $1,677, marking an increase of 8.4% year-over-year.

In some areas of Calgary, the rental market is even tighter. For example, the northeast region reported an extremely low vacancy rate of just 1.0% and a higher median rent of $1,800. Similarly, the Fish Creek area maintained a median rent of $1,800 alongside a vacancy rate of only 1.7%. Larger rental units, such as two-bedroom apartments, command rates starting at $1,850, while three-bedroom units in key areas can achieve median rents as high as $2,232.

While some neighbourhoods may be approaching market saturation, others continue to present strong investment opportunities for 2025 and beyond. Jesse Davies emphasizes the importance of strategic property selection to maximize returns. “Beltline and East Village offer exceptional rental yields due to their proximity to transit and other amenities, making them highly competitive districts for investment,” Davies explains. He also highlights the northeast as a “promising region, where low vacancy rates and high rental income potential can reward investors who carefully align properties with the needs of a neighbourhood’s specific demographics.”

Urban Revitalization Boosting Inner-City Markets

Urban revitalization continues to transform Calgary’s housing landscape, particularly in neighbourhoods like East Village, Kensington, and Inglewood. Major infrastructure projects, such as the Green Line LRT and mixed-use developments, have enhanced connectivity and urban convenience, further attracting residents who prioritize walkability and live-work-play amenities.

Demand for condos in these areas remains strong. Beltline, for example again, maintains consistent demand due to its accessibility and proximity to employment hubs. High-density residential zones with mixed-use features are well-positioned to appeal to buyers or renters looking for homes that offer urban vibrancy alongside accessibility to transit and services.

Improved infrastructure has also contributed to rising buyer interest in mid-tier condos. New developments near planned transit stations are particularly attractive, offering long-term potential for price appreciation.

Calgary’s Office Conversion Initiative is one factor helping to renew the downtown core by turning vacant office buildings into residential and mixed-use spaces, including over 1,400 new homes. This could lead to significant changes in the condo market in the area, providing new housing and investment opportunities, while revitalizing the city’s center.

Sustainability Gaining Market Importance

Environmental sustainability is emerging as a priority for many Calgary condo buyers, especially younger demographics. Rising energy costs have incentivized a shift toward energy-efficient housing options. New developments featuring sustainability upgrades such as solar panels, energy-efficient heating and cooling systems, and eco-friendly design certifications, such as LEED, are outperforming their older counterparts.

Properties with sustainable designs could see faster resale times and higher rental interest in 2025. Municipal incentives like the Clean Energy Improvement Program could make an impact, particularly as renters and owners alike look to mitigate rising operating costs.

Predictions for 2025: What Lies Ahead

Price Growth

Price growth is expected to continue, although it is likely to moderate after its unusually strong gains in the past couple of years. Jesse Davies projects a year-over-year increase of 5% in 2025, especially since the recent population expansion is likely to continue to support steady demand. He advises, “Potential buyers should act sooner rather than later, as there are options available to choose from now, and prices are expected to rise.”

Sustained Rental Market Strength

Rental market strength is likely to persist, due to the increase in population and vacancy rates remaining tight. Jesse Davies anticipates rental prices to rise by 4% to 6%, and adds “The continued scarcity of affordable and key niche rental options, coupled with limited new construction in high-demand areas, positions Calgary’s rental market for sustained strength in 2025.”

Increased Focus on Sustainability

Sustainable developments will retain high market appeal. Eco-friendly retrofits in existing condos, alongside newer builds designed with green technologies, are expected to capture both buyer and renter interest.

Regional Performance Variations

Central neighbourhoods, bolstered by transit access and urban renewal, will continue to outperform less central areas in 2025. Meanwhile, markets experiencing high inventory growth without corresponding buyer demand could face challenges. Emerging developments and newly established neighbourhoods present opportunities for early investment in areas poised for growth. 

Navigating these shifting market dynamics can be streamlined with the guidance of an experienced Calgary condo realtor, who can assist buyers, sellers, and investors alike.

Maximizing / Taking Advantage of Calgary’s Condo Market Dynamics

The Calgary condo market in 2025 presents a complex but opportunity-rich landscape. As affordability pressures push more buyers toward multifamily housing and population growth sustains rental demand, condos are likely to remain a critical segment of Calgary’s evolving real estate market. 

Additionally, experts are calling for a rise in investment interest across Canada, and given Calgary’s landlord-friendly environment, the city is likely to be a key hotspot. Calgary’s condo market provides attractive options for those seeking accessible homeownership or profitable rental investments. However, successfully navigating this complex market is much easier with the help of a professional who offers a deep understanding of local trends, expert insights, and guidance tailored to your specific goals.

Careful attention to submarket dynamics, individual priorities, and long-term development strategies is essential in Calgary’s competitive housing sector. This requires specialized expertise, which Jesse Davies offers as a leader in Calgary’s condo market. Recognized as one of the best realtors in Calgary, Jesse has earned multiple industry and customer awards. 

Davies’ in-depth market insights, wide network, and exclusive opportunities provide clients with a distinct competitive edge. By working to clearly understand their goals, he offers tailored strategies that lead to better-informed investment decisions. This personalized approach ensures clear communication and strategies that align with clients’ long-term success. 

With years of experience, the Jesse Davies Team excels at interpreting market shifts and emerging developments, providing clients with timely and actionable insights. Looking ahead to 2025, Jesse Davies is committed to proactively guiding clients through the evolving Calgary condo market landscape, to help ensure their success. By staying ahead of the new year’s emerging trends and anticipating key shifts, Jesse can help clients strategize and achieve their goals. 

The Edmonton real estate market in November 2024 showed annual growth and notable price increases.

Sales

According to the Realtors® Association of Edmonton, year-over-year, unadjusted sales increased by 17%. There were a total of 1,920 residential sales in November, an 18.4% increase from November 2023 but a 22.8% drop from October 2024 – an expected decline as the market moves into its slower winter months. Detached homes led with 1,138 sales, representing a 23.6% year-over-year increase, while semi-detached, row/townhouses, and apartment condominiums grew 18.0%, 18.0%, and 3.1%, respectively.

According to an Edge Realty Analytics December report, seasonally adjusted sales experienced a 17% increase in year-over-year sales, signalling a sustained improvement in market activity.

Source: Edge Realty Analytics

Listings

The Realtors® Association of Edmonton reported 2,114 new residential listings in November, representing a slight 1.4% year-over-year increase but a significant 27.9% drop compared to October 2024. Edge Realty Analytics noted that new listings, when seasonally adjusted, fell by 1% year-over-year. 

The sales-to-new listings ratio in Edmonton, which tracks the number of homes sold against newly listed homes, rose to 76% in November, up from 75% in the previous month.

Source: Edge Realty Analytics

Total active listings declined by 17.3% from November 2023 and 12.1% from the prior month, according to the Realtors® Association of Edmonton. 

Prices

Price growth remained robust across all housing types. The RAE data highlighted:

• The average residential price was $436,401, for a 14.7% year-over-year increase, despite a 0.9% decline compared to October 2024. 
• Detached homes averaged $540,320, up 12.8% from the previous year, though down 2.3% month-over-month. 
• Semi-detached units sold for $411,469 on average, reflecting a 13.3% annual increase and a modest 1.1% monthly rise. 
• Row houses/townhouses averaged $288,176, up 6.0% year-over-year despite a monthly decrease of 6.4%. 
• Apartment condominiums averaged $200,266, experiencing notable annual growth of 17.0% and a monthly increase of 4.5%. 

Construction

Construction activity in Edmonton is growing but still below historic peak levels. The Edge Realty Analytics report suggests that despite the construction activity, Edmonton is likely to experience an extended period of limited housing supply in comparison to demand, as the construction activity is not keeping up with the growing demand.

Source: Edge Realty Analytics

Potential for an Active Spring

As the market looks ahead to 2025, Realtors® Association of Edmonton Chair Melanie Boles reports that there are “whispers of a busy spring market in 2025”, and suggests that property owners and investors may wish to prepare accordingly.

Establishing clear expectations from the very beginning is a critical factor in managing tenant relationships. Taking the time to outline responsibilities, communicate rules, and foster open communication sets a foundation for smoother, more cooperative interactions over time. When these expectations are unclear or inconsistently communicated, misunderstandings and conflicts are more likely to arise, leading to increased frustration and potential turnover. Starting off on the right foot with tenants not only prevents many common issues but also enhances trust and satisfaction, leading to longer, more successful tenancies.

Why Starting Off a Tenant Relationship Right Matters

Positive starts are always important. The early days of a tenancy are crucial for setting the tone of the entire relationship. Clear communication from day one helps tenants feel confident in their new home, minimizes confusion, and establishes mutual respect. 

When tenants know what to expect and feel their landlord or property manager is approachable, they are more likely to voice concerns early, follow the rules, and maintain the property as agreed. Additionally, a positive beginning leads to better first impressions, which often translates to tenants staying longer, paying rent on time, and adhering to lease agreements. In contrast, if tenants start off unsure of their responsibilities or feel neglected, they may be less cooperative, leading to disputes, costly maintenance issues, or early lease terminations.

Establishing Ground Rules During Lease Signing

One of the best opportunities to set expectations is during the lease-signing process. It’s essential that landlords or property managers walk tenants through every section of the lease, ensuring they fully understand the terms. Key areas to highlight include rent payment deadlines, maintenance reporting procedures, and rules about noise, guests, or common area usage. When tenants are aware of their responsibilities from the start, they are more likely to comply, significantly reducing the chances of conflict later.

Preventing Miscommunication and Conflict

Missteps in expectation-setting often lead to conflicts that could have been easily avoided. 

For instance, a tenant might assume that landscaping services are included, only to be hit with unexpected fees at the end of the month for not maintaining the property outside. Similarly, if an owner or property manager fails to clarify maintenance reporting procedures, minor issues may go unreported (or not be received), so remain unresolved, eventually escalating into larger, costlier repairs. Another common example is subletting. A tenant may mistakenly believe they can sublet their apartment, and not obtain the proper permission if subletting was not clearly and specifically addressed.

Setting clear expectations from the outset is critical to avoiding these issues. Regular check-ins with tenants, especially in the first few months, can reinforce guidelines and clarify any uncertainties before they become problems. These check-ins also create opportunities for tenants to ask questions as they arise, as they may not think of everything immediately after moving in, and new questions often come up over time as the tenants settle in.

Setting Up for Success

Have a system in place to ensure all new tenants consistently get the right information and have it on hand when they need it. This will simplify the process for you, and make it easier for your tenants.

An effective way to set expectations is by providing tenants with a welcome packet outlining essential information, such as garbage pickup schedules, parking rules, and emergency contact numbers. They can easily review it at their convenience, and recheck the information whenever they need to. Another best practice is sending a friendly follow-up email after a tenant moves in, reiterating key lease terms and providing a direct point of contact for questions. These proactive measures not only clarify expectations but also demonstrate the landlord’s commitment to a smooth, hassle-free experience for the tenant.

Consistency

Even with the best of starts, it’s important to be aware that setting expectations is not a one-time event but an ongoing process. Landlords and property managers must ensure that their actions are consistent with the agreements made during lease signing. If the lease states that maintenance requests will be addressed within 48 hours, it’s crucial to meet that commitment. Following through on these promises builds trust and reinforces the tenant’s respect for their landlord. Tenants are then more likely to uphold their responsibilities in kind. Both parties know what they can expect, and know how to work together for a more successful arrangement.

Calgary’s real estate market in November 2024 highlights a complex balance of rising supply, steady sales, and moderating price trends.

Sales Activity and Market Trends

Calgary recorded 1,797 residential sales in November 2024, relatively unchanged from the same month last year, according to the Calgary Real Estate Board (CREB®). This performance is 20% above the long-term average for November, demonstrating resilient demand. While detached, semi-detached, and row home sales increased, year-over-year flat sales figures were primarily driven by a steep decline in the condominium segment.

Source: Edge Realty Analytics

Supply and Inventory

Inventory levels rose to 4,352 units, a significant 45% year-over-year increase from the 3,000 units reported in November 2023. New listings also climbed by 5% compared to the previous year, according to an Edge Realty Analytics report in December. These gains reflect an ongoing response to strong construction activity and rising population levels, which continue to shape Calgary’s market dynamics.

However, the increased supply has not been uniform. Improvements in housing options vary widely by location, price range, and property type. For example, condominiums, in particular, played a central role in boosting inventory levels, with a 65% year-over-year jump in condo listings, as noted by Edge Realty Analytics.

Market Balance

The sales-to-new listings (S/NL) ratio increased from 64% in October to 70% in November. Months of supply reached just over two months, up from earlier levels of less than two months.

These conditions suggest improving balance, providing buyers with more options. Nonetheless, certain market segments, especially affordable homes, continue to favour sellers due to sustained demand. Calgary remains in a seller’s market, though the dynamics are beginning to normalize.

Source: Edge Realty Analytics

Pricing Trends

Year-over-year, prices are up 4% from the same time last year, with a November benchmark price of $587,900.

• Detached homes saw a 7% year-over-year price increase to $750,100.
• Semi-detached homes recorded an 8% rise to $675,100.
• Row houses increased by 7%, reaching $454,300.
• Condominiums, while seeing higher inventory levels, posted a 9% price gain year-over-year, with a benchmark price of $337,800.

Condominium Market

In the condominium segment, sales dropped 24% compared to last year’s record high. Still, the 429 sales recorded in November remain 47% above long-term trends. New condo listings rose to 1,482, marking a shift in supply that brought months of supply above three months, which is the highest of any housing segment in Calgary.

The November benchmark price for condominiums stood at $337,800, down from October but still 9% higher year-over-year.

Construction

According to Edge Realty Analytics, dwellings under construction rose by 3.3% in October. For a better overall picture and a sense of potential future resale supply, however, excluding purpose-built rentals under construction is helpful. Doing this shows a notable increase in Calgary recently, including an 8.5% increase in October, which is the biggest monthly increase in five years.

Source: Edge Realty Analytics

Affordability

Affordability has improved, with monthly mortgage payments trending lower in Calgary and remaining well below national averages. 

Calgary’s real estate market reflects a transitioning landscape. Rising inventory, especially in the condominium segment, is creating opportunities for buyers. At the same time, price growth has moderated. However, the market remains in seller’s territory, although there are some indicators of normalization and the potential for more balanced conditions heading into 2025.

Effective communication is a cornerstone of successful property management, benefiting both landlords who manage their own properties and those who contract third-party managers. Whether it’s explaining lease terms, responding to maintenance requests, or negotiating rent increases, clear and proactive communication fosters positive landlord-tenant relationships, prevents misunderstandings, and streamlines the property management process. For property owners, ensuring strong communication—whether managing the property personally or through a property management company—is key to minimizing conflicts, retaining tenants, and maintaining the value of the property. When communication breaks down, the consequences can be significant, but with the right strategies, property managers can recover and restore trust.

Preventing Misunderstandings Through Proactive Communication

Clear communication from the outset sets expectations and prevents potential conflicts. For instance, during the lease signing process, it’s crucial to walk tenants through the lease terms to ensure they understand their responsibilities. Maintenance procedures, rent payment timelines, and rules regarding the use of shared spaces should all be explicitly communicated. Tenants who feel informed are less likely to be surprised or upset by policies they don’t fully understand.

Poor communication can result in tenant dissatisfaction, and jeopardizes the owner’s long-term returns.

A common area where communication failures occur is in the handling of maintenance issues. If tenants aren’t informed about how to report problems or the timeline for repairs, frustrations can arise. For example, if a tenant submits multiple maintenance requests but not to the right person or in the right way, these requests could become lost. The tenant then doesn’t receive confirmation or updates from the property manager, leading to frustrations. Additionally, the delayed response can also lead to property damages, and a dissatisfied tenant who will choose not to renew a lease. Proactive communication, including providing tenants with a clear process for reporting issues and timely updates on repair progress, can prevent this.

For property owners who hire third-party property managers, it’s important to ensure that they have effective communication protocols in place and a good record of positive, successful management. Choosing a property manager carefully, and having regular check-ins with your property manager to review communication processes can help avoid such pitfalls.

Building Strong Landlord-Tenant Relationships

Strong communication builds trust between landlords and tenants, which in turn leads to better cooperation. Promptly addressing tenant concerns, such as noise complaints or questions about shared amenities, makes tenants feel heard and valued. As a result, they are more likely to follow lease terms and stay longer, reducing turnover and vacancy periods. 

 Stronger, communicative relationships can protect your property from negligent behaviour. Maintaining open lines of communication can make property management far more manageable, as tenants who trust their landlords are more likely to be responsible and respectful of the property. Tenants tend to take better care of a property when they feel valued. Additionally, good communication can prevent smaller issues from escalating into disputes or legal conflicts, ultimately safeguarding your investment. Timely responses, regular updates, and transparent policies are critical for good relationships, whether you are handling these tasks personally or have a property manager. 

Recovering From Communication Breakdowns

Even the best communicators occasionally experience breakdowns. When this happens, the key to recovery is swift acknowledgment and transparency. If your tenants are impacted by a property issue such as disruptive repairs in their unit without ample notice, they could be understandably upset. Acknowledging this, explaining the reasons for the oversight, and offering compensation, such as a rent discount or gift card, can allow the owner to rebuild trust.

Addressing communication breakdowns head-on is essential for maintaining trust with tenants. Delays in repairs or lack of transparency around rent changes can lead to dissatisfaction, but offering swift resolutions and taking responsibility can prevent the loss of a tenant. Regular communication with your property manager about tenant concerns and response times can help catch potential breakdowns before they impact tenant satisfaction.

It’s also important to use breakdowns as learning opportunities. Analyze where the communication process failed and make adjustments for future interactions. Update processes and consider upgrading technologies to make communication more efficient and seamless. Continue to review processes to ensure they are optimal.

Communication systems are often overlooked, as many property owners do not realize the full importance of this aspect of real estate investment. However, whether handled directly or through a professional, proactive communication is the key to long-term success in property management.

As of January 1, 2025, landlords in the City of Hamilton face significant changes when it comes to conducting renovations or repairs that require tenants to vacate rental units. The Renovation Licence and Relocation By-law 24-055 aims to curb bad faith evictions, also known as renovictions, by introducing new licensing requirements.

Overview of the Renovation Licence and Relocation By-law

The new by-law mandates that landlords must apply for a renovation licence if they issue an N13 notice requiring tenants to vacate their rental units for repairs or renovations. This measure does not prohibit N13 notices and the vacation of rental units, but it does establish greater oversight to ensure renovations are great enough to require tenant displacement and increase tenant protection in these situations.

The by-law applies to all rental housing units in Hamilton and requires landlords to:

• Obtain a licence before starting renovations.
• Provide evidence that vacant possession is essential for the renovations.
• Educate tenants on their rights and support programs.

Key Requirements for Landlords

Applying for a Renovation Licence

Landlords must apply for a renovation licence within seven days of serving an N13 notice to tenants. The application package must include documentation confirming that the renovations are extensive enough to require tenant displacement.

A critical component of the application is a letter or report from a qualified professional (either a licensed engineer or architect in good standing) detailing why vacant possession is necessary.

Renewing Licences

If the renovations or repairs exceed one year from the date of the licence issuance, landlords are required to renew the licence. Licensing and By-law Services should be contacted before the licence expiry date to proceed with the renewal.

Tenant Right of First Refusal

Tenants displaced by renovations have the right of first refusal to return to their unit once the work is complete, at a rent no higher than what would have been charged had there been no interruption in tenancy.

To exercise this right, tenants must notify the landlord in writing within 120 days of receiving the N13 notice. The landlord must then make appropriate temporary arrangements and submit an attestation form describing the agreed arrangements to Licensing and By-law Services.

Landlord Requirements to Support Tenants

Under the by-law, landlords must provide tenants who are exercising their right of first refusal with one of the following options:

• Temporary accommodations comparable in cost, location, and size to the tenant’s original unit, or
• Monetary compensation (rent gap payments), calculated as the difference between the tenant’s current rent and the average market rent for similar-sized units in Hamilton, based on Canada Mortgage and Housing Corporation (CMHC) data.

If landlords and tenants cannot agree on temporary arrangements within 120 days, landlords may seek an exemption by providing documentation, including evidence of efforts to secure agreements. Exemption requests are evaluated at the discretion of the Director of Licensing and By-law Services.

Landlords are also required to supply tenants with a Tenant Rights and Entitlement Package, outlining tenants’ rights under the by-law.

Practical Tips for Compliance

File Licence Applications Promptly

Submit the renovation licence application within the required seven-day period to avoid delays or penalties. Be prepared to include detailed documentation from a qualified professional.

Prioritize Tenant Communication

Inform tenants of their rights and clearly outline any temporary arrangements or compensation options. Open and transparent dialogue can help resolve disputes and avoid legal complications.

Track Renovation Timelines

If renovations are expected to exceed one year, contact Licensing and By-law Services well in advance to begin the licence renewal process.

Gain Professional Assistance

Contact organizations like the Housing Help Centre Hamilton & Area (HHCHA), or engage legal counsel to ensure compliance with the by-law while effectively managing tenant relations.

The HHCHA offers education and resources for landlords. It can guide landlords through their legal responsibilities, help manage tenancy issues, and connect them with additional support services.

Impacts

Hamilton’s Renovation Licence and Relocation By-law significantly changes how landlords handle renovations requiring tenant displacement.

It enables greater municipal oversight, adding formal licensing and documentation requirements, and allows the City of Hamilton to monitor N13 notices systematically, track trends, identify potential abuses, and take corrective action when necessary. 

Landlords need to justify vacant possession with reports from licensed professionals, introducing a firmer – and potentially higher – standard for determining if a unit truly needs to be vacated. Furthermore, tenant protections like temporary accommodations or compensation must now factor into the decision-making process, adding another consideration for landlords when planning renovations.

The City of Toronto has made progress in its housing efforts with its Purpose-Built Rental Housing Incentives stream, a program aimed at expanding the city’s rental housing supply. This initiative forms part of the city’s larger commitment to enable the construction of 20,000 rental homes by the end of 2026, addressing critical housing shortages.

The Purpose-Built Rental Housing Incentives stream is a component of Toronto’s Rental Housing Supply Program, which supports the development of various new rental homes, including rent-geared-to-income, affordable rental, rent-controlled, and purpose-built rental homes. This stream offers financial incentives to developers to encourage the construction of purpose-built rental units, thereby increasing the city’s rental housing supply.

Program Goals and Approved Projects

The first phase of the program has resulted in the approval of 7,156 net new rental homes across 17 projects in 12 wards. These include 6,109 net new purpose-built rental units and 1,047 net new affordable rentals. The city has set a requirement that at least 20% of all units must meet its income-based definition of affordability, ensuring lower rents for qualifying tenants. These affordability commitments are guaranteed for at least 40 years, with the potential to extend up to 99 years.

Financial Incentives for Developers

Developers participating in the program are offered a range of financial incentives to make their projects more viable. The most notable benefit for purpose-built rental homes is an indefinite deferral of development charges on the municipal portion. Projects including affordable rental units are further incentivized with exemptions from development charges, community benefit charges, parkland dedication fees, and property taxes during the affordability period.

Additionally, eligible projects may qualify for up to $260,000 in capital funding per affordable or rent-geared-to-income unit. A new Multi-Residential Property Tax Subclass, expected to be confirmed in the 2025 budget, will also reduce municipal property tax rates for new multi-residential buildings by 15 percent.

Eligibility and Prioritization

Both private and non-profit housing organizations are eligible to apply for the program. However, the city has prioritized projects based on specific criteria to ensure swift progress and alignment with its goals. Priority was given to developments that were financially ready, had secured approvals, or demonstrated an ability to begin construction in the near term. Projects led by organizations with strong financing histories, including those designated as frequent builders by the Canada Mortgage and Housing Corporation (CMHC), were also favoured.

All approved developments must commit to maintaining their purpose-built rental and affordable housing status over the long term. This requirement ensures that these homes remain available as rentals, contributing to the stability of the city’s housing supply.

Sector Response and Future Potential

The response to the first phase of the program has been overwhelmingly positive, with 75 applications submitted representing over 32,600 proposed rental units, including 7,400 affordable homes. Although only 17 projects were approved initially, the city is optimistic about advancing additional applications in the program’s second phase.

The second phase of the program could unlock up to 24,450 additional rental units if provincial funding through the Build More Homes Rebate becomes available. This rebate would offset development charges and a significant portion of property taxes for eligible projects, making them more financially feasible for developers.

The Purpose-Built Rental Housing Incentives stream presents a new opportunity for investors and developers to participate in Toronto’s growing rental market. The combination of deferred development charges, property tax reductions, and capital funding aims to lower the financial barriers to building new rental housing. 

Purchasing both sides of a duplex can be an excellent strategy for Canadians looking to enter the real estate market while building long-term wealth. This approach offers unique opportunities, including generating rental income, taking advantage of favourable financing terms, and mitigating risk. However, it requires careful planning, financial preparation, and an understanding of local markets and regulations. 

Benefits of Buying Both Sides of a Duplex

Owning both units in a duplex provides a unique level of control and flexibility that is difficult to achieve in other real estate setups. This can simplify property management and other aspects of property investment, especially for first-time landlords.

Entry-Level Investment Opportunity

Buying both sides of a duplex combines homeownership with the potential for earning passive income and property appreciation of both units. This can be an accessible way to build equity and establish a real estate portfolio.

Autonomy 

Unlike in situations where one side of the duplex belongs to a separate owner, you are not at the mercy of a third-party neighbour’s decisions or wishes. 

Owning both sides of a duplex gives you control over major improvements and repairs, like roofing, siding, or structural updates, that would typically require collaboration with the owner of the second unit. This collaboration can often create challenges. Deciding on shared expenses, such as roof repairs, exterior painting, or driveway resurfacing, often requires negotiation, compromises, and, at times, disputes. However, owning both sides eliminates this complexity.

This eliminates potential delays or conflicts over timing, budgets, or the scope of work and avoids the risk of being pressured into updates you may not prioritize. 

While landlords must meet minimum legal standards for rental units, owning both sides still offers greater autonomy in managing your property. This makes duplex ownership a unique option—allowing you to enjoy affordable housing without some of the complications common when two or more owners share a wall.

Choosing Your Neighbours

When you own both sides of the duplex, you have the distinct advantage of greater control over who lives next door. If you’re living in one unit and renting out the other, you get to screen potential tenants to find reliable ones that will not damage the property and detract from your value.

Simplified Landlord Responsibilities

For first-time landlords, owning and living in one unit of the duplex can make the landlord role more manageable. When you’re on-site, daily tasks like maintaining the yard, clearing snow, or inspecting the property become more convenient. For example, mowing the lawn for both units at the same time reduces the time and effort compared to managing a property in a separate location.

Being physically present also makes it easier to monitor the other property, without being invasive, and allows you to respond more quickly to any issues. 

Financing and Tax Benefits

Buying both sides of a duplex can offer potential financial benefits, especially if you live in one unit. Owner-occupied properties often qualify for lower down payments and favourable mortgage terms, allowing lower down payments than non-owner-occupied properties. Rental income from the second unit is taxable but allows for deductions like maintenance costs, utilities, and loan interest, which can help offset expenses. 

Challenges and Considerations

As with any investment, there are risks. Purchasing the second unit as a rental property exposes you to risks, including market volatility, vacancies, tenant damages, and others. There are also several factors to consider, so you are well prepared.

Financial Readiness

While duplexes can offer financial relief, there remains the higher initial cost of buying both units, instead of just the one required for living.

Property Management

Managing rental units adds responsibilities. Landlords must maintain the property, handle tenant issues, and ensure regulatory compliance under provincial tenancy laws. 

Zoning and Municipal Regulations

Certain municipalities may impose restrictions on duplexes, such as occupancy limits, additional parking requirements, or regulations about short-term rentals like Airbnb. Buyers must ensure the property complies with local bylaws.

Local Market Conditions

Location is critical when purchasing a duplex. In urban centres such as Toronto, Vancouver, or Montreal, demand for rental housing is strong, but purchase prices are higher. Smaller cities like Kingston or Guelph offer lower entry costs, as well as consistent rental demand, making them appealing to first-time investors.

Mortgage Pre-Approval and Budgeting

Determine how much mortgage you qualify for and the associated costs. Canadian lenders often consider potential rental income when calculating mortgage eligibility, but each institution has different criteria.

Tenant Screening and Agreements

While being next door may encourage tenants to be responsible and careful with the property, you still need to carefully vet potential tenants. You want to find ones that are likely to be reliable in paying rent and not causing unnecessary damages and wear and tear on your property. Use written leases that clarify responsibilities up front, and which adhere to provincial landlord-tenant regulations to avoid legal issues.

Property Condition and Inspection

Older and poorly maintained duplexes are likely to create higher maintenance costs for you. Investing in a thorough home inspection can identify potential structural or mechanical issues, helping to avoid expensive surprises.

A Unique Path to Homeownership and Landlord Success

By owning both sides of a duplex, you not only gain full control over your property and immediate neighbours but also make the transition into being a landlord significantly easier. On-site living allows for hands-on management, efficient upkeep, and smoother operations while reducing the uncertainties often associated with working with independent neighbours or tenants. This approach is particularly well-suited for first-time buyers looking to balance homeownership with the financial benefits of real estate investment.

Investing in affordable and sustainable housing has often been seen as a compromise between social impact and financial return. However, the Canada Mortgage and Housing Corporation’s (CMHC) MLI Select program aims to change this. By incentivizing projects that prioritize affordability, sustainability, and accessibility, MLI Select enables real estate investors to achieve both goals. 

The Mechanics of MLI Select

MLI Select uses a scoring system built around three pillars: affordability, energy efficiency, and accessibility. Each project earns points based on its alignment with these criteria. Higher scores unlock more favourable financing terms, such as:

• Enhanced loan-to-value (LTV) ratios: Up to 95%, reducing the upfront capital required.
• Extended amortization periods: Up to 50 years, significantly lowering monthly debt obligations.
• Lower insurance premiums: Reducing the overall project costs.

Demand for Affordable Housing

The demand for affordable housing in Canada is at an all-time high, driven by rising housing costs and population growth. MLI Select helps investors address this gap by offering financial incentives that reduce project risk. By incorporating affordable units into their developments, investors can expand their potential tenant pool and mitigate vacancy risks through lower vacancies.

Strategies for Profitability

Optimize Unit Mix

Balancing affordability with market-rate rents is crucial for maintaining profitability. For example, dedicating 30-40% of units to rent at 80% of the area’s median market rent can fulfill MLI Select’s affordability requirements while preserving cash flow from the remaining units. 

Invest in Energy Efficiency

Energy-efficient buildings earn higher scores under MLI Select while offering substantial cost savings. Practical measures include upgrading insulation, installing energy-efficient windows, and incorporating solar panels or high-efficiency HVAC systems. These improvements lower heating and electricity bills and boost property value.

Target Cost-Effective Accessibility Features

Accessibility features not only improve MLI Select scores but also appeal to seniors, individuals with disabilities, and others. These improvements can be done cost effectively for good results.

Retrofit Existing Properties

It is possible to invest in older properties and retrofit them to meet MLI Select criteria.

Combining Profit and Purpose

As an example, if an investor purchases a 40-unit apartment building for $10 million, and aims to qualify for MLI Select by incorporating affordable units, energy efficiency upgrades, and accessibility features, there could be tangible savings and profitability improvements.

Affordable Units

To meet MLI Select’s affordability criteria, the investor designates 20% of the units (8 out of 40) as below-market rentals.

• Current market rent: $1,800 per unit per month
• Below-market rent (at 80% of market): $1,440 per unit per month for the 8 affordable units
• Revenue impact:
  • Market-rate units (32 units): $1,800 x 32 = $57,600 per month
  • Below-market units (8 units): $1,440 x 8 = $11,520 per month
  • Total monthly rent: $57,600 + $11,520 = $69,120

By strategically deciding on the number of below-market units and maintaining 80% of market rent for those units, the investor preserves strong cash flow while meeting MLI Select’s affordability requirements.

Energy Efficiency

The investor retrofits the building to improve energy efficiency by 25%, focusing on practical upgrades such as improved insulation, LED lighting, and a high-efficiency HVAC system.

• Energy costs before retrofits: $4,000 per month
• Energy costs after retrofits (25% reduction): $4,000 x 0.75 = $3,000 per month
• Monthly savings: $1,000
• Annual savings: $12,000

Additionally, these upgrades increase the building’s MLI Select score, qualifying the investor for better financing terms and potentially making the property eligible for environmental grants or tax rebates.

Accessibility Features

The investor incorporates key accessibility upgrades, such as accessible entrances, grab bars in common areas, and adaptable units for tenants with disabilities.

• Upgrade cost: $100,000 for retrofitting common areas and installing adaptable features in 4 units (10% of the total).
• Impact:
  • Broader tenant appeal, reducing vacancy rates and improving tenant retention.
  • Higher MLI Select score, unlocking superior financing terms.

Financing Benefits Under MLI Select

Without MLI Select:

• Loan-to-value (LTV): 75% (standard maximum for conventional financing)
• Loan amount: $7.5 million
• Interest rate: 5%
• Amortization period: 25 years
• Monthly mortgage payment: Approximately $43,635

With MLI Select

By meeting the MLI Select criteria through affordable units, energy efficiency upgrades, and accessibility improvements, the investor qualifies for enhanced terms:

• Loan-to-value (LTV): 95%
• Loan amount: $9.5 million
• Interest rate: 5%
• Amortization period: 50 years (extended under MLI Select)
• Monthly mortgage payment: Approximately $41,287

With MLI Select, the investor finances a larger portion of the property (95% vs. 75%), which requires significantly less upfront equity:

• Equity required without MLI Select (25% of $10M): $2.5 million.
• Equity required with MLI Select (5% of $10M): $0.5 million.
• Upfront equity savings: $2 million, which can be reinvested elsewhere.

Despite financing a larger loan amount, the extended amortization term reduces monthly debt payments by $2,348, directly improving cash flow.

Managing Risks for Financial Sustainability

While MLI Select offers significant advantages, investors need to plan carefully to mitigate risks.

Maintaining Compliance

Investors must meet CMHC’s affordability thresholds throughout the loan term. Regular monitoring of rental rates and adhering to guidelines is critical to avoid penalties.

Addressing Upfront Costs

Energy-efficient upgrades and accessibility features often require significant initial investments. Assess the benefits of the MLI Select program against these costs.

A New Competitive Advantage

Investors leveraging MLI Select can access growing demand from socially conscious tenants who value affordable, sustainable housing. Moreover, meeting these criteria often makes projects eligible for government incentives or tax benefits, further improving financial outcomes.

The latest Canada Mortgage and Housing Corporation (CMHC) Rental Market Report, released in December, sheds light on various shifts in Canada’s rental landscape, including the critical role that condominiums have played in boosting the rental supply, particularly in markets like Toronto and Vancouver. As rental conditions remain tight across most major urban centers, new condominium apartment completions have been significant contributors to Canada’s rental stock.

Increase in Condominium Apartment Completions

One of the standout findings from CMHC’s report is the significant rise in condominium apartment completions, particularly in cities like Toronto and Vancouver. As more investor-owned condominium units entered the rental market, there was an impact on the available rental supply. In Toronto, the rental share of condominiums reached an all-time high of 41%, driven by a surge in investor-owned units coming into the market. As resale conditions became less favourable, investors chose to lease their units instead of selling.

In contrast, Vancouver also saw an increase in the rental share of condominiums, though it was more modest compared to Toronto. The resale market in Vancouver remained more balanced, allowing more investors to sell their units upon completion rather than leasing them, contributing to a lower share of rental condominiums.

Declining Rental Condo Shares in Calgary and Edmonton

Meanwhile, Calgary and Edmonton experienced the opposite trend. In these markets, rising demand for homeownership, coupled with favourable conditions for sellers, led to a decrease in the rental share of condominiums. With housing demand spiking and interest rates influencing purchasing decisions, more investors were incentivized to sell their units instead of leasing them. The financial attractiveness of selling during a competitive real estate market led to fewer rental condos entering these markets, which is reflected in the declining rental condo share in both Calgary and Edmonton.

Vacancy Rates and Rent Trends

The condominium rental market itself showed little fluctuation in terms of vacancy rates. As of 2024, the average vacancy rate for condominium units in the 17 CMAs surveyed by CMHC remained very low at 0.9%, unchanged from 2023. The number of units on the rental market remained limited, helping to maintain tight rental conditions. 

While rent growth for new condominium units remained high at 5.4% for a two-bedroom in 2024, a slight slowdown was observed when compared to the previous year’s 8% growth. However, turnover rents, or those charged when units changed tenants, saw a massive increase of 23.5% across. This trend was particularly pronounced in cities like Toronto, which has rent cap restrictions, where rents for new tenants jumped sharply, with some rents rising up to 40.7%, contributing to difficulties for new renters to enter the market and creating further strain on existing tenants looking for stable housing.

Supply

As Canada’s rental market faced tight conditions across many large cities in 2024, condominiums emerged as a significant factor in the rental supply growth. It is important to note, however, that there was record-breaking growth in purpose-built rental apartments of 4.1% in 2024, which was the highest in over 30 years.