Complain all you want, but the rental housing market needs condo investors

Many recent real estate market commentaries have been critical of privately owned housing, especially condominiums, being a major source of new rental supply. Implicit in this criticism is the call for more purpose-built rentals.

Provincial governments, starting with British Columbia in 2016 and Ontario in 2017, responded with a series of interventions, including targeted transfer taxes on foreign homebuyers. The tightening of mortgage regulations, especially the stress test, by federal regulators was another moderating factor.

Surprisingly, real estate investors have been blamed for an increase in rents. Some believe that an increase in condominium prices contributed to an increase in rents in places such as Toronto. A 2019 report by the Canadian Centre for Economic Analysis — commissioned by the City of Toronto — revealed that condominium rents from 2006 to 2018 increased by 30 per cent in the city.

The critics of investor-driven supplies of rental housing seldom entertain the obvious counterfactual: what would be the average rent if condominium rentals disappeared from the market? In the absence of tens of thousands of rental condominium units, rents would be much higher than current levels. Multi-family purpose-built rental dwellings are needed. For one thing, they offer the security of tenure, unlike condominiums, which can be withdrawn from the market at short notice. Also, such units usually offer no-frills housing, which is often less expensive to rent than condominiums.

Um no it doesn’t

Article fails to mention elephant in the room which is Airbnb.

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