Housing advocates say that a city’s vacancy rate isn’t healthy unless it stands at 3% or higher. But in a sign of how tight Toronto’s housing market is, renters are likely to celebrate the news that the vacancy in the city just hit 1.5% in the second quarter — the highest level since at least 2015.
That data comes courtesy of market research firm Urbanation Inc. The vacancy rate, which measures how many apartments are empty at any given moment, has moved from a shockingly low 0.3% to 1.5% in the past year.
This is the highest level since Urbanation began tracking the city’s vacancy rates in the first quarter of 2015.
Why the improvement? An increase in housing supply is a huge factor. The number of available purpose-built rentals within buildings completed since 2005 are growing, increasing by 7.6% in the second quarter.
Developers are also continuing to build new units altogether: 2,608 new units were proposed in the second quarter, ramping up the total number of planned units that have not yet started construction to 44,093.
Urbanation noted that the growth in development proposals came after Ontario’s Progressive Conservative government removed rent control for new buildings late last year. Under the new regulations, the city’s existing rent control rules do not apply to new buildings, additions to existing buildings and some new basement apartments if they were being rented out for the first time after Nov. 15, 2018. By providing landlords with the opportunity to rake in a larger profit, the Ford government hoped to give developers an incentive to build more units and increase the city’s limited housing supply.
Since Urbanation’s report does not account for units that started occupancy within the last 12 months, the new units that aren’t subject to rent control do not figure into the firm’s vacancy rate calculations.
The average rent for a purpose-built apartment reached a record $2,475, the report said.