If you are a prospective buyer or investor trying to make sense of the next few years, here is the short version: We are likely going to be flush with inventory over the next couple of years, but new housing completions will slow considerably starting in early 2028.

Supply and demand are undefeated. When housing availability is high, prices and rents shrink; when inventory is in short supply, prices and rents increase. Be careful when listening to hot takes from wannabe housing analysts who manipulate data and peddle outrage.

What are the smartest voices in the industry saying and doing? On the 91st episode of Toronto Under Construction, three seasoned operators (Matt Kingston of H&R REIT, Jeremiah Shamess of Colliers, and Joshua Marlowe of Berkshire Axis) offered a clear window into how real developers are behaving. Rents for newer purpose-built rentals in downtown Toronto have eased as new product becomes available. Incentives are up, and pro formas are tight. Kingston noted that it is not much cheaper to build than it was three years ago, even with improved financing options. All of those condo sites will not be converted to rental as many people had hoped. Land trading reflects the caution: Deal counts are low, with only the very best located and correctly priced sites moving, according to Shamess. If developers are not buying sites today, that is just another sign that the market will be undersupplied for many years to come.

Evidence over theatrics

If you want balanced discussion that prioritizes evidence over theatrics, put Toronto Under Construction in your queue, alongside Hogtown, Commercial Real Estate Podcast, Working Capital, AFIRE, The Real Estate Espresso Podcast, Real Estate Development Insights, and The Vancouver Real Estate Podcast. If you want interesting long-form content, where the goal of the host is not cheap virality, these real estate podcasts are a good place to start.

If you have spent some time listening to those podcasts and are still not buying the supply and demand narrative, have a read over the data story below on why rents paused, and why they are likely to re-accelerate.

Begin with first principles: Vacancy and rent growth move in opposite directions. In the Toronto CMA, condo rentals have run at sub-two-per-cent vacancy most of the past two decades, while purpose-built vacancy spiked to 4.6 per cent in 2021 during the pandemic, and then tightened back to 1.4 per cent in 2023 before ticking up to 2.5 per cent last year. When vacancy dips below two per cent, rents typically rise; when it rises above about four per cent, rents flatten or fall. That pattern has held for decades.

What changed in 2023 and 2024 was supply. After a decade averaging roughly 13,000 new rentals annually (about 10,000 investor-owned condos added to the rental pool and 3,000 new purpose-built units starting occupancy), the industry accelerated deliveries, an outcome of record and near-record pre-construction sales in 2019, 2021 and early 2022. About 22,000 net new rentals were delivered in 2023, then about 30,000 in 2024. Even with that wave, rents still rose in 2023 before moderating to a growth rate of about one per cent in 2024, according to data from Canada Mortgage and Housing Corp. The reason rents did not fall further is the deep undersupply built up over the prior decade, combined with latent demand from households that delayed moving out on their own.

Window for favourable terms

Looking ahead, the pipeline tells the tale. Because most new rental supply comes from newly completed condos being rented by investors, the collapse in new condo sales (from nearly 30,000 in 2021 to less than 5,000 in 2024) sets up a sharp drop in completions after the 2025–26 bulge. Under construction data points to fewer than 11,000 condo completions in 2027 and an almost inconceivably low 2,300 in 2028. Even assuming purpose-built starts continue, total new rental additions are projected at roughly 31,000 in 2025, 19,750 in 2026, 17,500 in 2027, about 8,000 in 2028, and potentially less than 6,000 in 2029.

Translate that into rent expectations as projected by Bullpen Consulting: Modest growth of two to three per cent in 2027 as supply slows, and then accelerating to the 5.5- to seven-per-cent range in 2028 and 2029 when completions fall far short of demand.

For end-users, tenants and occupiers: If you are renting and flexible on timing, the next 12 to 18 months are likely the best window to secure favourable terms, especially in buildings offering incentives. If you are buying a new home, the near-term pricing outlook is mixed. Construction costs remain elevated, financing is tighter and land markets are thin. That usually means fewer launches, more careful product design and a focus on luxury projects with better margins and less price-sensitive buyers. The bigger driver of price appreciation in the future will be the supply drought that follows today’s slowdown in condo pre-sales.

For investors: You must consider new home prices as they relate to the resale market. If there are deals that allow you to buy below the “retail price,” make sure you are doing all your due diligence and reading your contract carefully.

Housing analysis should be data-driven and evidence-led. Understanding data requires reading between the lines, and not always accepting the most basic conclusions. Be wary of content that leans on outrage, simple villains or one-variable explanations. Markets are complex systems: Immigration, household formation, interest rates, land use rules, construction capacity and investor behaviour all interact. The best analysts show their sources, admit uncertainty, update views as facts change and avoid grandstanding. If the person or people you listen to always think it is a great time to buy, or always think the market is crashing, chances are they are not being honest with you. They cater to an audience that just wants someone to validate how they are feeling, not tell them what is actually happening.

Grounded perspectives

If you want grounded perspectives, follow practitioners who build, lease, finance or manage real assets, and podcasts that probe rather than provoke. The purpose is not to confirm a bias but to improve decisions. Over the next few years, supply dynamics, not catchy slogans or tired memes, will set the path for both rents and prices.

Do your own research, surround yourself with an experienced team and buy what you can afford. Good luck.