As tenants in the Town of Canmore scramble to find housing, the municipality has responded with a series of measures, including a vacancy tax to fund the construction of non-market homes.Jeff McIntosh/The Canadian Press
For buyers in Canmore, Alta., finding a resale property for less than $1-million is difficult.
Over the past three years, the median sold price in Canmore fluctuated between $798,000 and $1.5-million, a market report compiled by real estate platform Wahi shows.
Although Canmore is a competitive player in Canada’s recreational property market, resale prices are largely out of reach for local buyers, which means the rental market in the resort town is ruthless.
According to Canada Mortgage and Housing Corporation’s latest data, the vacancy rate for Canmore’s 630 purpose-built rental units rose to 1.8 per cent in October, 2025, a 0.7-per-cent increase relative to the year prior – yet the median rent reached a record $2,400, up by $725 since 2022.
As tenants scramble to find housing, the Town of Canmore has rolled out a series of measures to increase the supply of rentals, including a development grant for long-term rentals and a vacancy tax, known as the livability tax program, to fund the construction of nonmarket homes – homes that non-profits and governments make affordable by foregoing profit.
“The livability tax program is an attempt to solve Canmore’s housing crisis using the tools available to the town without needing to depend on funding from other sources of government, which can be sporadic or unreliable,” says Canmore Mayor Sean Krausert.
Implemented in May, the vacancy tax applies a 0.4 per cent surcharge to underused residential properties whose owners’ primary residence is located outside of Alberta, bringing their tax rate on par to that of tourist homes, a classification that includes short-term rentals. The town deems a residential property to be underused – or vacant – if it’s not occupied by a full-time, primary resident for at least 183 days of the year, 60 of which should be consecutive.
Initially, the livability tax was expected to bring in an annual $10.3-million into the town’s coffers. But in April, after the provincial government exempted Alberta residents from paying the vacancy tax in the name of fairness and consistency, the number of qualifying properties dropped to 819 from 2,260.
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Canmore’s vacancy tax is now set to create only $4.4-million in additional revenue in 2026, delaying the construction of some 3,400 affordable homes Canmore needs to meet demand by 2041.
“We have plans to build a couple of thousand units of nonmarket and rental properties over the coming years,” Mr. Krausert says. “Currently, we have 500 under construction.”
Besides increasing tax revenue, the implementation of a vacancy tax in other Canadian jurisdictions has resulted in improvements to the availability of long-term rentals, moderating rent growth.
Before British Columbia introduced its speculation and vacancy tax in 2018, “people in Vancouver were willing to leave units empty as part of real estate speculation,” says Tsur Somerville, an associate professor of real estate at UBC’s Sauder School of Business. Ultimately, the tax helped lower demand and decelerate appreciation in areas where vacant properties concentrated.
But speculation is not the main reason one quarter of all residential properties homes sit underused in Canmore. Rather, it is the touristic nature of the mountain town that attracts second-home buyers. This creates a different outlook for Canmore’s livability tax program.
“An investor who wants to rent out their unit long-term won’t be concerned by a vacancy tax,” Mr. Somerville says. “But for a person who wants to use their property periodically, that’s more of an issue.”
Acknowledging that there is little research on the impact of vacancy taxes on resort markets such as Canmore, Mr. Somerville says that raising taxes on underused homes could deter recreational property buyers, and affect tourism. “The wealthy people who want to own a house there are also driving the economy – that’s the inherent challenge of a vacancy tax.”
But, so far, the impact of the vacancy tax on both the rental and resale markets has been negligible.
Mark Walker, a partner at PEKA, Canmore’s largest rental management company, says that little has changed in the company’s long-term rental portfolio, which comprises more than 1,100 units, since the vacancy tax was implemented in May.
Instead, it is the supply of medium-term rentals, with leases as long as six months, that has been expanding.
“We’re seeing an increase from people who own secondary homes in town and they don’t want to pay the extra tax,” Mr. Walker says. “So they’re renting their property for six months.”
Although medium-term rentals can meet the needs of seasonal tourism workers in Canmore, “what we really need is predictable, long-term product,” he says.
“People who are renting out their secondary homes still have a usage component, so they’re not really providing long-term product.”
Meanwhile, home sales in Canmore remain steady.
Since January, 48 homes have sold in the mountain town, with properties over $1-million accounting for 91 per cent of all sales, says Canmore realtor Kelly MacMillan.
“The livability tax had had zero impact on the luxury market,” Ms. MacMillan says, noting that for buyers who can afford a second home in Canmore, adding a 0.4 per cent surcharge to their property tax bill isn’t always a deal breaker.
The resort town’s ready access to the natural beauty of the Rocky Mountains and Banff National Park, combined with its proximity to Calgary, make Canmore an ideal destination for lifestyle buyers from across the country, MacMillan says. “Many people from Ontario and B.C. are not necessarily buying a property as a second home, they’re looking to transition their whole life here.”
In the condo segment the situation is slightly different. In June, condo prices dropped to $783,000, a 9-per-cent decrease relative to June, 2025. But this is unrelated to the new tax, Ms. MacMillan says.
“Based on rent value versus property value, apartments aren’t a great return on investment, because the market is still a little bit expensive to get the right monthly rent to cover costs.”
Incidentally, although short-term rentals remain an attractive proposition for investors, since the Town of Canmore introduced new taxes for tourist homes late in 2024, the pace of growth in this market seems to be cooling.
In June, the number of short-term rental listings reached 2,543, a 5-per-cent increase year over year, amidst an unusually high occupancy rate of 90 per cent.
“We came out of the pandemic with really strong, 20 – 30 per cent listing growth,” says Bram Gallagher, director of economics and forecasting at short-term rental analytics platform AirDNA. “Demand is now growing faster than supply.”
This is good news for investors – and for the town’s coffers.
As the tourism sector continues to thrive in Canmore, and investor demand for recreational properties surges, the livability tax program enables the cash-strapped municipality to reap a portion of the revenue visitors create, and dedicate it to building the nonmarket homes local workers need.
“There’s a misconception that tourism brings extra dollars to the municipality,” Mr. Krausert says. “We don’t get a surplus of money because businesses are doing well, whereas levels of government that can charge income tax, they do get extra money when businesses flourish.”
Editor’s note: This article has been updated to correct the number of units in the inventory of PEKA, a Canmore, Alta.-based rental management company.