NOTE: Before reading this post, readers should read my first post in 2019 in which I explain how housing markets in Ontario can be separated by type and tenure.
We can separate purpose-built rentals into three categories: (1) old rentals built pre-2000, (2) new rentals built in 2000 or later, and (3) the number of new rentals needed to reach a target number (or proportion) of new rentals. The first two categories are the existing purpose-built rental supply, but what is the third category? This is a hypothetical category composed of not-yet-built purpose-built rentals which will need to be constructed in the future for the proportion of new rentals to reach a chosen target.
The chart below shows the breakdown of old and new purpose-built rentals for Ontario’s ten largest cities, plus the number of new rental units needed in each city for new rentals to make up 20% of all purpose-built rentals. I’ve chosen 20% as a target since London, the city which has seen the most new rentals developed in Ontario, is slightly over 20% (as of fall 2019 new purpose-built rentals in London make up 20.3% of all purpose-built rentals). If London can absorb that many new rentals, enough for them to constitute a fifth of all purpose-built rentals, then it’s likely that other cities, many of which are economically and demographically stronger than London, should be able to match London.
Using a 20% target means that most of Ontario’s ten largest cities need a significant amount of new rentals, enough to suggest one or two additional rental buildings (at a minimum) could be absorbed in each city, and in the larger cities several new rental buildings. In Mississauga, for example, the 5,928 new rentals needed to reach 20% new means constructing approximately 59 100-unit buildings or 30 200-unit buildings.