⭐ Our BuildCanadaHomes.org Analysis:
Takeaway:
The article outlines a significant shift in Toronto’s rental landscape, where younger renters are increasingly favoring older apartment buildings due to their character, larger layouts, and rent control protections. The preference for heritage structures over modern condos is driven by dissatisfaction with the cramped layouts and lack of affordability of newer builds, which often cater to investors rather than residents. The Canada Mortgage and Housing Corporation’s recent report highlights this trend, indicating that prospective tenants are finding better value and comfort in older properties as rent prices in that segment begin to catch up to new constructions.
For home builders and developers in the Greater Toronto Area (GTA), this trend poses both challenges and opportunities. In the short term, developers may face rising vacancies within new builds, pressuring them to reconsider design strategies that prioritize the needs of end-users rather than mere investor appeal. The actionable takeaway is for developers to pivot towards creating larger, more livable units that cater to today’s discerning renters, especially as demand for functional housing grows. If this shift is not embraced, the implications could be severe: ongoing disinterest from renters may force developers to pivot or downsize projects, widening the gap between supply and demand in an already strained market, underscoring the need for a more tenant-focused construction approach in Ontario’s evolving housing landscape.
Delphine Winton just recently moved into an apartment by Casa Loma built in 1936 — and she’s not looking back.
During her hunt for a new space, the 22-year-old student was strictly looking for older buildings, choosing to stay away from the sliding glass doors, lack of “character” and odd floor plans she’s seen in newer condos.
“God forbid you have enough room to put a dining table in,” she told CBC Toronto.
Winton isn’t the only Torontonian opting out of moving into new builds — for reasons ranging from a lack of rent control to poor layouts — at a time tenants are increasingly gaining leverage in the market.
Nicole Luongo, a 36-year-old policy analyst who just signed a lease for a unit in Little Portugal that’s “pushing 100 years old,” says she found the sterility of new units off-putting.
“[I] was also looking for an adequate size, a layout that felt livable versus claustrophobic,” she said.
For her, the affordability of an older place was also a major factor.
New purpose-built rental units are taking longer to lease because of increased competition from the secondary market, according to a July report from the Canada Mortgage and Housing Corporation (CMHC).
Though CMHC data shows rent prices in older buildings are starting to catch up with new ones, affordability in tight, expensive markets deteriorated so much that many renters are settling for modest savings “by choosing older stock,” according to the CMHC report.
‘Who are these condos for?’
Aside from wanting a bigger layout, having rent control is a must for Samantha Dangubic as she looks for a bigger place to live with her partner.
In Ontario, landlords in buildings that were first occupied before Nov. 15, 2018 are limited by how much they can raise rent every year.
“Some friends who did happen to try out the newer builds, they were hit with like a $500 increase,” Dangubic said.
“No one is able to pull that off nowadays, which really makes me curious who are these condos for?”
Over half (55.2 per cent) of Toronto condos built from 2016 to 2020 were used as investment properties as of 2020, according to a study from the Canadian Housing Statistics Program.
That figure drastically decreases for older buildings: 40.1 per cent for condos built from 2001 to 2015 and 24.1 per cent of condos built in 2000 or earlier.
Apartments increasingly being viewed as investments rather than homes to live in is a big reason behind poor layouts, according to David Fleming, a Toronto-area broker and real estate blogger.
He said in the past decade, developers started shrinking the size of their condos, aiming to squeeze in as many units as possible while keeping prices the same, as building costs have ballooned.
While pointing to a floor plan of a new 267 square foot condo, he said “this was only built so that an investor could buy it, so the developer could get pre-construction financing. And that is why these units exist.”
“I think by the time you lay out your bed, which right now is a pull out couch, you could probably open the fridge with your toes,” Fleming said.
“I think it really speaks to the fact that we’re living in a literal shoe box.”
Toronto condos built from 2016 to 2020 are about 400 square feet smaller than ones built between 1971 and 1990, when looking at their median size, according to Statistics Canada — and fewer investors are rushing to buy them.
Only 53 new condo units were sold in Toronto in September, new BILD data shows.
Poor market gives renters more options
The rental market is also changing. As of October, the average rent for unfurnished one-bedroom units in the city was about $300 less than it was in October 2023, according to Liv Rent, a Canadian online rental platform .
The state of the market means renters can be pickier with the space they choose to live in, said Toronto real estate agent Alex Zhvanetskiy, who has also noticed renters opting out of some newer builds, citing lack of rent control and poor layouts.
“They’re moving a lot more cautiously,” he said. “They don’t have to act as quickly. They have a lot more options.”
As GTA condo vacancies reach record highs, many landlords with small portfolios have been left scrambling — or leaving the industry altogether.
Some landlords for new apartments are trying to offer incentives, like one month of free rent, to make sure they’re getting tenants in the door. But do developers care whether renters like what they build?
For Fleming, it’s a straight no.
He says developers can only build what they can sell pre-construction, and larger units are just not as popular among investors, who often look to buy the cheapest units possible.
“If the city were to step in and say no more 267 square foot condos, I do not think, in fact, I know — nothing would get built in Toronto,” Fleming said.
Source: Read the original article at ‘A literal shoe box’: Why some Toronto renters are avoiding new builds on www.cbc.ca
