Real estate economists and rental activists alike have long been clamouring for more supply in Toronto’s high-priced and fiercely competitive rental market.
Not so long ago, RBC Senior Economist Robert Hogue called Toronto’s rental supply deficit the worst in the country. Substantially increasing rental inventory in the city has been a major component of many policy proposals that aim to address the Toronto region’s persistent affordability issues.
Housing Market News Alerts
Sign up for news alerts on the Toronto housing market
It will be welcome news then that there are now more than 100,000 purpose-built rental units in the pipeline across the Toronto region. This figure, shared in an April report by Urbanation, includes all rental units that are planned or currently under construction.
In its report, Urbanation said the number of planned rental units in the pipeline as of the first quarter of 2021 increased by 34 percent compared to the same period last year. The number of rental units currently under construction in the region fell slightly on an annual basis but is twice as high as the level from 2016.
But the timing of this expansion is interesting, to say the least. As of the first quarter, Urbanation said that newer purpose-built rental apartments completed since 2005 had an overall vacancy rate of 6.6 percent, up substantially from just over one percent a year ago.
In the broader rental market, prices have fallen considerably since the beginning of the pandemic, though there are signs that rents have bottomed out and may start climbing again soon.
Regardless of the current, pandemic-influenced state of the market, many economists see this rental unit supply expansion as vital for putting the Toronto housing market on a healthier long-term path.
In commentary published in late March, RBC’s Hogue called for removing “disincentives” that discourage developers from building more rental apartments. The need for more affordable rental options is greater than ever, he wrote.