Number of homebuyers and renters vastly outpacing number of available homes in Alberta

Many Albertans are struggling with the high cost of housing due in part to surging population growth, which means the number of homebuyers and renters is vastly outpacing the number of homes available to buy or rent. As a result, home prices and rents will likely continue to rise.

Indeed, according to a new study published by the Fraser Institute, between 1973 and 2022, the latest period of available data, Alberta’s population increased by 2.4 people (each year, on average) for every new home built (single-detached houses, townhouses, condos). In 2022, however, the population increased by 6.2 people for every new home built—the highest number on record. Put simply, the gap between the number of homes produced and the number needed has never been so wide.

Put differently, over the entire 50-year period, 26,123 housing units (each year, on average) were completed while population growth in the province averaged 58,180 people per year. In 2022, Alberta’s population grew by 164,793 people, dwarfing the number of new housing completions (29,837) for gap of 134,956—again, the highest on record.

Clearly, Alberta has accelerated population growth while homebuilding has stagnated, hence the historic gap between supply and demand. With population growth projected to continue at an exceptionally strong pace, there will be even more housing demand moving forward.

Faced with this housing crisis, policymakers at all levels of government and of all political stripes are feeling pressure to respond. But while more political attention to this longstanding problem is welcome, there’s also a risk that policymakers look in the wrong places for quick wins. For example, they may introduce new tax subsidies for first-time homebuyers, which would increase demand without increasing supply. Or implement restrictive rent controls, which would stunt the growth of purpose-built rental housing.

Instead, policymakers—at city hall, in the Smith government, and in Ottawa—should concentrate primarily (if not solely) on the gap between supply and demand, and focus on closing it. Of each policy proposal we should ask—does it stoke demand? Does it restrict supply? If the answer to either is “yes” it will not solve Alberta’s housing woes. In fact, it will likely make them worse.

Beyond new policies, there’s also the (arguably harder) task of identifying and removing existing policies that either stoke demand or restrict supply. As tempting as it may be to introduce fresh new ideas, it’s important to remember that policy choices led us to where we are today, and that rethinking some of these choices will be necessary to close the demand-supply gap. Many of these reforms will be difficult or politically sensitive, and reforms must be well-conceived and transparent. But Albertans elect their representatives to make difficult choices with the greater good in mind.

Alberta faces a historic gap between the number of homes needed and the number being built. Until meaningful efforts are made to close this gap, affordable housing will remain out of reach to an ever-greater share of our population.