1. Rentals Are The Future - The Government's Solution To The Housing Shortage
CMHC (Canadian Mortgage Housing Corporation), City of Toronto and other municipalities are all in agreement: the answer to rapid affordable housing is purpose-built rentals. The focus is getting Canadians into affordable housing and the fastest way is as renters, not owners. The government is encouraging developers to build and manage rentals by giving low interest loans to make projects more profitable and through these programs, the rent can be capped thus ‘solving’ the affordable housing crisis. The CMHC launched the MLI Select program: financing for purpose-built rentals. With just 5% down, investors can apply and be approved for mortgage loans with reduced interest rates and amortizations as long as 50 years for rental projects. The program is quickly gaining popularity.
In Q1 of 2025, CMHC reported they insured $10,476 million in MLI Select projects alone - all of which are of course rentals. In August of 2024 Graywood Developments cancelled Centricity, a condo project located at Dundas St and Church St to convert it into a purpose-built rental. Baker Real Estate, 1 of 5 the city’s largest pre-construction marketing brokerages launched an entire new division dedicated to purpose-built rentals in November 2024 . Hazelview Investments just secured one 6 of the MLI Select program’s largest loan to build a 856 unit purpose-built rental at Bloor St. W and Dufferin Ave. The list goes on and on, developers are turning away from condo projects.
Whether developers are in favor of the shift toward rentals or not, their hands are tied. With rising construction costs and empty sales offices, they too have lenders to pay. The future inevitable - the government wants purpose-built rentals and they’ve changed the rules of the game to make sure it happens.
What does this mean the future of Toronto condos?
Once the existing pipeline of inventory is absorbed there is no more inventory on the way. With a lack of new inventory, the value of
existing inventory increases even without considering the future increase in demand. If you’re a condo owner with a manageable cash flow - keep it, it’ll only age like fine wine. Better yet, if you have the capital to buy now, take advantage of all the incentives. Developers are having a fire sale and it’s while supplies last.
The existing policies are a mere band-aid to the housing affordability crisis. If you have dreams of being a home or condo owner these programs are only setting you back further as the government has effectively halted the production on new housing supply for future home owners.​
2. High Density Housing Starts Will Be More Common Than Single Dwelling Units
Between 2018 and 2024 Statistics Canada stated after adjusting for living patterns and migration, Ontario started 29 dwelling units for every 100 new people on average. The slumped market has stopped developers from building any new inventory. What was already a shortage is about to intensify and the fastest way to build mass homes - high rise. It won't be an overnight solution, developers need 6-8 years from land purchase to completion. CMHC is estimating Ontario will be short 1.85M dwelling units by 2030.
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As of August 2025 - Toronto's official plan was amended to approve taller buildings near 120 transit stations across the city. This has the potential to unlock 1.5M housing units which the city will need once we hit 2030. Once the current inventory is absorbed, the country will be in a dry spell until developers can deliver the next wave of inventory.
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Other economic factors also lead us to believe the future of our housing stock will primarily be high density housing, the key word being affordable. RBC Economics predicts in the year 2030, 55% of households will be priced out of buying any property and only 26% will be able to buy detached homes. The remaining 19% can purchase but will be constricted to a condo - which after the flood of projects that are being converted into rentals will only be more scarce. Intuitively this segment of households constricted to a condo will only increase as affordability becomes more of an issue as the cost of living outpaces any increase in wages. Studies calculated that Torontonians needed to make $8.80 more than the minimum wage just to cover the cost of living in 2025. The cost of living is not on it's way down and neither is the cost of real estate long term. High rise condos may not be the preference for households but it will be the only option for most.
3. Public Transit Accessibility Will Become Even More Important
Toronto is investing $70M into public transit improvements and extensions. Why? Because the city currently has the worst traffic in North America beating giant cities like New York City, LA, and Mexico City. With the fraction of people across a larger area, the only reason for this level of congestion can only be one thing: lack of public transit and infrastructure.
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The city hasn't built a new highway in nearly 50 years, the Ontario line is the first new subway line in decades. The lack of development in the city's infrastructure has taken a toll on people's daily commutes - especially after some of the largest employers have started calling their workers back in office full time. In 2023 Torontonians lost an average of 98 hours in traffic - and it's not going unnoticed.
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We predict that as the population continues to grow and strain the current infrastructure - homes that are located nearby to public transit such as GO Stations, TTC Subway and streetcar stations will only become more valuable. While transit has always been a consideration for tenants and purchasers, we think the worse the traffic gets the more property values nearby transit hubs will increase relative to other properties.
Sources
>CMHC MLI Select Q1 2025 Numbers
>Centricity Turned Into Rental
>Baker Real Estate Launches Rental Division
>Hazelview Investments Secures CMHC Loan
>Toronto density is the future
>Statistics Canada. Population Growth Table 17-10-0005-01
>CMHC Housing Starts 34-10-0135-01
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