RENTAL SHORTAGE IN TORONTO OVER THE NEXT TEN YEARS

The Federation of Rental-Housing Providers of Ontario (FRPO) released a rental market report that stated that strong demand factors of (pre-pandemic) job growth, immigration, and high homeownership prices combined with lagging rental construction activity will create a shortage of 200,000 units in Ontario’s rental market over the next ten years.

What’s more, while COVID-19 has undoubtedly taken a toll on the economy, FRPO says pre-pandemic demand pressure will return once the economy rebounds and borders re-open, making this supply gap “unavoidable.”

The critical rental supply comes from purpose-built rental and condos. This means, the city of Toronto actually relies on you and I to become landlords as condo investors and provide critical rental stock to the marker.  A typical residential building has around 200 – 300 units. So if we have an undersupply of 20,000 units per year, that would be mean we would need almost 100 new buildings EVERY YEAR to satisfy the demand. That’s crazy! This is reflective only of the demand for rentals, this does not take into account any demand for sales and ownership.

I know, this sounds counterintuitive given what’s currently going on in the Toronto rental market specifically in the downtown core. Keep in mind though, today’s current state of the market is a snapshot in the longer term – this is a global health crisis and NOT a policy change or political issue. 

The fundamentals of Toronto real estate still remain and stay strong: 

➕ Aggressive immigration targets (more in the next 2-3 years to catch up for the gap in 2020). This means the immigration numbers that Canada lost this year, will be made up for over the next 2-3 years once the global travel restrictions begin to ease

➕ Canada remains the world’s 3rd leading destination for international students and almost 50% of them study in Ontario

CANADA AIMS TO ACCEPT FAR MORE IMMIGRANTS IN THE NEXT THREE YEARS

Immigration is not a problem in our country, it’s a solution. 

Immigration is a key contributor to the strength of Toronto’s real estate market. New Canadians will continue to drive up housing demand in the GTA, as the region continues to be one of the most desirable locations in Canada.

The Canadian government is sticking to its ambitious plans for bringing newcomers into the country, even as its borders remain essentially closed.

On October 30, 2020 the Liberal government plans to bring in more than 1.2 million immigrants over the next three years, despite hurdles created by the global pandemic.

Canada aims to bring:
➕ 401,000 new permanent residents in 2021
➕ 411,000 in 2022
➕ 421,000 in 2023

These numbers represent an increase of about 50,000 for each year

As the population in the GTA and surrounding regions increases, so does the demand for suitable housing. New Canadians will drive up housing demand in the GTA, as the region continues to be one of the most desirable locations in Canada

The result will be a healthy tension between supply and demand within the residential real estate sector—particularly within the multifamily segment—in the coming years

As for the economic stall ensued by COVID-19, market experts cite that Canada will continue to be an attractive destination for immigrant families, due to factors such as public healthcare and the cheap dollar

Did you know?

➕ In the last 20 years, Ontario has been home to about 52% of Canada’s immigrants. 

➕ The Greater Toronto Area (GTA) is home to 45% of Ontario’s population, welcoming 77% of the province’s newcomers.

It’s no wonder, with the projected massive population growth there will be a rental shortage in Toronto over the next 10 years!