Toronto residents turn to long-term renting

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While apartment renters still make up the majority of renter households, interest in houses for rent is clearly rising

The future of Toronto belongs to renters.

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But, as a report from Point2 Homes demonstrates, that doesn’t mean single-family homes are becoming obsolete.

“As housing prices continue to soar in Toronto, more residents are turning to long-term renting — not only in apartments, but also in single-family homes,” said Alexandra Ciuntu, author of a Point2Homes report called Houses Over High-Rises: Canada’s Growth in Single-Family Renter Households Outpaces Multifamily.  https://www.point2homes.com/news/research/canada-growth-in-single-family-renter-households-outpaces-multifamily.html

“The city is adjusting to a new reality where renting is no longer a temporary phase, but the primary way many people secure stability, space, and comfort in a housing market that’s rapidly closing off traditional paths to ownership.”

Between the last two Census reports, single-family rentals in Toronto grew by nearly 9,000 units, while multifamily rentals increased by more than 23,000 units. However, the former’s growth rate of 19 per cent outpaced the latter’s 4.9 per cent.

“While apartment renters still make up the majority of renter households, interest in houses for rent is clearly rising: the share of single-family renter households went from 8.9 per cent in 2016 to 10 per cent in the most recent Census,” Ciuntu added.

The Point2Homes report cites higher interest rates — and therefore tightening mortgage costs — as an outsized reason for Toronto’s growth of rental households, noting they grew at twice the pace of homeownership dwellings between 2016 and 2021.

Toronto-based Isaac Quan, managing broker of Living Downtown Realty, has clients who could purchase single-family homes but, for a variety of reasons, have instead chosen to rent such homes.

“They don’t want to buy right now because they think the market may drop or interest rates are too high and they’re not sure what’s going to happen with their jobs, but they need to live somewhere, so the safest thing for them is to rent a place first,” Quan said.

He added that, of the cohort choosing to rent houses instead of condos, they tend to be families and prefer areas like Midtown and Leaside.

“They don’t want to live downtown with their young kids and they need larger rooms,” Quan continued. “I have a client right now who just rented a house waiting for the market to settle, but I’m also hunting for a house for him and his family to buy and live in.”

However, there’s an unmistakable trend occurring in Toronto. Most younger people in the rental market will remain there for the rest of their lives, should they remain in Canada’s largest city.

But, as Quan reminds, that isn’t uncommon by global standards.

“It will be more like Hong Kong or Singapore, or some of the more expensive Asian countries where everyone just rents,” he said. “You’ll have to be a multi-millionaire in Toronto to own.” According to Tony Irwin, president and CEO of the Federation of Rental-Housing Providers of Ontario, there’s traditionally been a stigma attached to renting, but — echoing Quan — he says that’s wrong-headed.

“In lots of other parts of the world, even other parts of Canada, there’s a greater acceptance of renting than perhaps there is [in Toronto],” Irwin said.

As rental demand grows among wider swaths of the population, small multifamily dwellings won’t cut it anymore.

“There’s a need for more family-sized rental units,” Irwin said.