However, rents for condominium apartments are anywhere from 30 per cent to 40 per cent more than traditional rental apartment buildings. With low mortgage carrying costs, CMHC reports that the pricing gap between owning versus renting a condominium apartment is tightening. In October 2010, a combination of increased supply, renters moving into home ownership and rising rents all caused the vacancy rate for condominium apartments to increase to from 0.8 per cent the previous year to 1.6 per cent (CMHC). This rate is still considered extremely tight and well within balanced market territory. Over the same time frame the vacancy dropped for traditional rentals, from 3.1 to 2.1 per cent (CMHC). With a somewhat static supply, lower price points and increased immigration, traditional rental apartments have been able to capture a big piece of the rental market.
Despite the significant impact of condominium apartment rentals on supply and demand conditions, traditional rental apartments will continue to offer substantial marketing advantages such as diversity of location, more affordable rents, larger suite sizes, more bedrooms, security of tenure (Rental Protection Act), fewer pet restrictions and professional landlords.
Dynamic employment growth in downtown Toronto and in the 905, combined with provincial planning policy forming land use intensification and transit over sprawl initiatives will ensure ongoing demand for rental housing for decades to come.
Jasmine Cracknell is a Senior Associate at N. Barry Lyon Consultants Limited.