The impact of immigration on the GTA rental market

Immigration is steadily on the rise across the GTA and beyond. Can our rental market accommodate the unprecedented demand? Will newcomers and current residents alike be able to find affordable places to live?

On a recent episode of TRREB’s Ready to Real Estate podcast, I had the opportunity to chat with Dr. Frank Clayton of the Centre for Urban Research and Development at Toronto Metropolitan University. We discussed potential ways that governments can alleviate the housing supply issue for our growing population.

Immigration is absolutely crucial to Canada’s economic development and population growth, but it is imperative that our infrastructure expands to reflect the growing demand. Looking ahead over the next three years, federal government immigration targets will allow for approximately 500,000 newcomers per year to settle across the country. From that amount, a record number is expected to settle in southern Ontario. On top of this, we will also see a substantial number of temporary workers and students requiring a place to live in our region.

The housing challenge

Historically, many new arrivals to the GTA have initially chosen to rent. The issue with this is that our rental market has become remarkably tight. Add to this the fact that higher borrowing costs have precluded some would-be first-time buyers from moving into homeownership, and it’s not surprising that rental accommodations have been hard to come by. This suggests that it will be difficult to bring enough affordable rentals online to meet the demand over the next few years.

Quick fix: Secondary suites

According to Dr. Clayton, one effective solution to build rental housing quickly is for federal and provincial governments to provide grants and interest free loans to homeowners to create “secondary suites.” Examples of this would include finished basements within an existing dwelling or even adding ancillary suites (such as laneway housing) to an existing lot. These types of units can be built relatively quickly and cheaply, compared to new rental housing, which presents a high cost to build per unit.

Solution through compromise

Another way to shelter the growing population is to accelerate the construction of new homes. Bringing more houses to market would allow middle-income renters to upgrade, thereby vacating their rental units.

Dr. Clayton recommends a compromise between the high-density housing and traditional single-family homes on larger lots. He suggests that we need to build “up and out.” To build out, governments must make more land available and allow for market-friendly processes to hasten development. This doesn’t need to result in large lots and low-density communities – it might include a mix of small lot singles, townhouses, stacked townhouses and multi-plexes. Essentially adding the “missing middle” we’ve heard so much about to new developments.

If you’d like to listen to my entire conversation with Dr. Clayton and other informative discussions with thought leaders, head over to TRREB’s Ready to Real Estate podcast. We cover a wide array of topics to keep our listeners up-to-date on all things real estate in the GTA.

You can also stay up to date with our monthly Market Watch. We break down prices, sales and new listings each month with an easy to glance report. Visit trreb.ca to explore the latest look into the housing market. Plus, connect with a TRREB member realtor and search listings in real-time on any device.