In 2022, Canada witnessed a historic population surge, with an increase of over one million people, marking the first occurrence of such growth in the country’s history. This growth equated to a 2.7% increase, bringing Canada’s total population to 39.57 million individuals. This population expansion is expected to generate heightened demands for critical services, encompassing housing, transportation, and healthcare.
The previous year, 2022, saw the highest growth rate since 1957, solidifying Canada’s continued distinction as the fastest-growing nation among the G7 countries. However, unless significant investments are made in the construction of new housing, the mounting demographic pressures could exacerbate the prevailing challenges related to housing affordability.
While a majority of Canadians express openness to increased investments in housing, there is a segment that harbors reservations. Concerns and doubts regarding real estate investors are prevalent, evident in various sources such as news articles, academic research, and government publications.
Nonetheless, it is essential to recognize the indispensable role played by investors in fostering the well-being and growth of the housing market. Primarily, they facilitate the realization of large-scale housing developments by providing the necessary funding during the extended construction phase. Looking ahead to 2024, these dynamics are poised to continue shaping Canada’s housing landscape.
Real Estate Investors Support the Pre-Construction Market
Why Pre-Construction Takes Years
A condominium project takes several years to complete. Developers must secure planning approvals, which in Ontario often take 500 days or more. Construction can add another two to five years. Buyers may wait five years or longer from the time they place a deposit until they move in.
These projects require significant capital. Many cost hundreds of millions of dollars. Some face delays or cancellations. Without investors, few groups would take on this level of financial risk or provide the necessary funding.
Why Buyers Cannot Carry the Risk Alone
Most buyers cannot absorb long timelines, complex approvals, or financing requirements. Investors step in early, allow developers to move forward, and take on the uncertainty that regular homeowners cannot manage. Their participation keeps construction moving and creates new housing supply.
Removing investors would slow development even more. Fewer homes would reach the market, and affordability challenges would grow.
The demand for rental housing is rapidly on the rise.
Renters Growing Faster Than Owners
Rental demand has increased sharply. In the 2021 Census, 33.1% of households were renters a 21.5% increase since 2011. Renting is often the only feasible option for younger Canadians. Only 36.5% of people aged 25–29 owned a home in 2021, compared to 44.1% in 2011.
Why the GTA Depends on Investor-Owned Rentals
Purpose-built rental buildings represent 41% of rental supply. Most were built more than 40 years ago. Only 23,590 purpose-built rentals have been added since 2000, compared to 223,954 built between 1960 and 1979.
New rental projects in Toronto take long to complete, about 100 months from application to occupancy. Only one-third received approval by the end of 2022.
Investors fill the gap. Condo rentals now account for:
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89% of rental apartment completions
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54% of rental supply growth in the GTA over the last decade
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A 130% increase in available condo rentals
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Less than 5% growth in purpose-built rentals
This growth shows how critical investor-owned condos are to the rental market. Without them, the GTA would face an even larger imbalance between supply and demand.
The involvement of investors remains indispensable
Demand continues to rise faster than supply. Over the next decade, the GTA is expected to add 135,000 new rental and condo units. Rental demand, however, is projected to reach 312,000 units. This leaves a shortage of 177,000 homes. Investors help close this gap. They provide rental units and support new construction. Without them, more renters would compete for fewer homes and face higher costs. Critics often overlook the financial risk investors take on. They finance units that would not exist otherwise. To address Canada’s housing shortage, investors must remain part of the solution not excluded from it.
The involvement of investors remains indispensable as we approach the year 2024 to ensure an adequate supply of rental housing to accommodate the expanding population. Without their participation, a growing number of individuals would be priced out of the market, facing heightened competition for a limited number of rental units.
The disparity between supply and demand is increasingly pronounced. Based on the current development trajectory, the Greater Toronto Area (GTA) is expected to witness the addition of 135,000 purpose-built rental and condo units to the housing supply over the next decade. Unfortunately, this figure falls considerably short of the projected demand for rentals, which is estimated to reach 312,000 units, resulting in a deficit of approximately 177,000 units. In this context, the role of investors in the market is more crucial than ever as we look ahead to 2024.
Take Action Now to Be a Part of the Solution
Investors play a vital role in Canada’s housing market. They supply rental homes for people who are not ready to buy, including students, newcomers, and young professionals. Their involvement provides flexibility in a market where many cannot afford ownership.
As Canada continues to grow, the need for rental options will increase. Supporting investors means supporting a balanced and functional housing system. Their role will remain essential moving into 2024 and beyond.