Calgary and Edmonton are currently leading Canada in new housing construction, according to recent data. In the first half of the year, housing starts in these two Alberta cities were more than double those in Toronto and significantly higher than in Vancouver, Montreal, and Ottawa. This surge in construction comes as many newcomers are moving to Alberta, attracted by its relatively affordable housing market. However, this influx has created pressure on the housing supply, resulting in rising prices.

Bill Black, chief executive of the Calgary Construction Association, expressed skepticism about the idea that increased housing supply will lead to lower prices. He noted that the rising costs of materials and labor, along with stagnant wages and household incomes that have not kept pace with inflation, are contributing to the affordability crisis. "It’s going to be a lot more than the volume of homes that will begin to help make a difference in this challenge," Black said.

From January to June, Calgary saw construction crews begin 79 new homes for every 10,000 residents, while Edmonton recorded 63 new starts per the same population. Both cities experienced double-digit increases compared to the same period last year. In contrast, Toronto's homebuilding activity has dropped to its lowest level since 1996, largely due to a 60 percent decline in condominium starts.

Michael Mak, a lead economist for the prairies at the Canada Mortgage and Housing Corporation (CMHC), indicated that the new construction in Calgary and Edmonton is largely driven by a growing demand for rental units. "Those make up a lot of the new units that are starting to be built and the units that are coming online," he said. Meanwhile, construction in Vancouver and Toronto is slowing, with new condominium projects in Vancouver down by over 13 percent in the first half of the year.

Efforts to increase housing density through rezoning in Calgary and Edmonton have sparked controversy. Some communities in Calgary have even taken legal action against the city over its zoning policy changes. After a court ruling favored the city, residents have appealed to Alberta’s highest court. Mayoral candidates in Calgary's upcoming civic election are calling for significant changes to these policies, and a similar debate is occurring in Edmonton ahead of its election on October 20.

John Hripko, a realtor with Royal LePage Benchmark in Calgary, pointed out that while increased density might theoretically lower prices, it does not always result in greater affordability. He explained that subdividing a lot to build two new homes might not lead to lower prices. "Density increased. However, affordability has not increased. It actually decreased," Hripko said.

Mak also noted that construction costs have risen significantly, by 30 to 40 percent since 2020, which naturally leads to higher prices for new homes. Despite rising demand, rental prices in Calgary have seen some declines recently. "There’s evidence that growth has definitely slowed down (over) the past year, and that’s largely (due) to the amount of inventory that’s coming online," Mak stated.

He added that while the construction of detached homes has peaked, new single-family homes are primarily being built in developing neighborhoods on the outskirts of the cities. Hripko emphasized that developers are responding to actual demand rather than building speculatively. "They’re not building speculatively, they’re building because you and I are walking in and saying ‘Hey, I want this house built,’" he said.