Toronto’s Premium Rental Boom Fails to Alleviate Affordable Housing Crunch
A massive influx of rental apartments has arrived in Toronto over the last few years, but two recent reports raise questions over whether this supply is actually creating more affordability throughout the rental market.
Last week, real estate analytics platform CoStar Group reported a national trend of substantially higher vacancy rates in newer, luxury buildings than in the most affordable units.
Mario LeFebvre, chief economist for Canada at CoStar Group, said these buildings have a vacancy rate about three times higher than the city average.
“There is a shortage of homes, but it’s a shortage of affordable homes,” he said.
The findings follow the Canada Mortgage and Housing Corp. (CMHC) 2026 Mid-Year Rental Market Update, released in June, that reported Toronto vacancies have increased in most areas of the market, but that the lowest-priced segments continued to face “pressure.”
Experts say the new supply is providing more options and competitive pricing to renters with higher-end budgets, but it’s not easing the crunch at the lower end of the rental market.
‘Two very different stories’
A new apartment complex a 12-minute walk to Danforth Avenue and Main Street offers a children’s playroom, a pet-washing station and many more amenities, with rent prices ranging from $1,955 to $2,610 for one-bedroom apartments to $3,550 to $4,300 for four-bedroom units and townhomes.
Online listings show at least 188 of the 484 homes, which were completed in 2024 and 2025, are available to rent, suggesting 39 per cent of the units are vacant.
It’s part of what the CoStar report described as “two very different stories” for old, lower-priced rentals and new, higher-priced rentals.
According to the analytics platform, Toronto’s average vacancy rate is 3.5 per cent, but units categorized as four and five “stars,” meaning they’re the most expensive, have a vacancy rate of 10.1 per cent, while units between one and three stars have a 2.6 per cent vacancy rate.
The CMHC report made a similar point. It found that Toronto asking rent prices have dropped to pre-pandemic levels, suggesting recent supply growth brought “modest affordability gains and more options in select market segments.”
But while it found vacancies increased across most market segments, units in the first-quartile of rent prices were “persistently tight.”
This suggests “limited downward filtering of new supply,” the report said.
It did note that even small increases in the vacancy rate could “meaningfully reduce average rent pressure.”
It takes a while for newly constructed rental buildings to fill up. Newapartment buildings that achieved 5 per cent vacancy in the last year took 21 months on average to get to that point, according to Urbanation data shared with the Star.
Toronto realtor Justin Bailey emphasized that developers of new buildings are “anticipating a certain rent” when they select their finishes and build good amenities.
”(They’re) trying to attract a different tenant profile, where it’s a little bit higher earning,” he said.
LeFebvre said he doesn’t blame developers for mostly bringing higher-end rentals to market, noting building costs increased by about 60 per cent after the pandemic due to supply chains “breaking,” and they still haven’t decreased.
“So if you were building something before the pandemic that was costing $300,000 to build, without you changing anything to your business model or how you operate as a developer, that same unit is now costing you $500,000,” LeFebvre said.
The problem is that family incomes have only risen about 10 to 12 per cent in that same time, he said.
New supply needs rent control, tenant advocate says
Jordan Nanowski, the lead economist on the GTA for CMHC, said condo and purpose-built rental completions have contributed to “rental market softness as a whole.”
But Toronto Tenant Union co-chair Bruno Dobrusin said it comes as no surprise that the supply glut hasn’t led to significant affordability improvements for everyone.
“We’ve said many times that more supply by itself is just not going to resolve the crisis that we’re in,” he said. “If we want to address the affordability crisis, we have to make sure that that supply is rent-controlled.”
He argued rent control should be a condition where public money is involved, pointing to a recent case of federal funding for the construction of a building that requires demolition of rent-controlled 1960s rental apartments in Midtown.
Focusing only on supply and demand — instead of rent control and greater affordability — fails to address the needs of working-class tenants, he said.
“They work at the airport, they work in the service industry in the city, and they cannot afford $2,500 rent, even if that rent goes down to $2,400.”
For those who currently live in rent-controlled units, moving into a non-rent-controlled unit that is “temporarily” more affordable is not a real option, he said.
This article was first reported by The Star
