Real estate, like everything else, is cyclical. It pulls in the unprepared, rewards the strategic, and resets itself over time. Toronto’s market is no exception. After a decade dominated by condo launches and investor-driven flipping, the rhythm is shifting and those paying attention are already adapting.
Condo Slowdown, Rental Surge
Roughly 18 months ago, Ontario’s new condo construction slowed to a crawl. High interest rates, elevated construction costs, and investor fatigue forced many developers to hit pause.
But that didn’t stop residential development. It just changed shape.
Enter Purpose-Built Rentals (PBRs) large-scale rental communities backed by institutional capital, often offering better layouts, family-friendly amenities, and long-term stability.
Condo Inventory Hits a Wall
According to Urbanation, in Q2-2025:
24,045 pre-construction units in Toronto remain unsold, that’s equivalent to 60 months of supply, and 55% of new condo units launched in Q1-2025 went unsold, just shy of a 30-year record.
“Project cancellations are mounting, construction starts are collapsing, jobs are being lost, buyers are losing a lot of money…” Shaun Hildebrand, President, Urbanation. Since 2024, 28 pre-sale projects (5,700+ units) have been paused, cancelled, or converted to rentals.
PBRs: The New Face of Urban Housing
This shift is reinforced by massive government investment: In 2025, the federal government pledged $15 billion to support 30,000+ new rental units across Canada. Over the next five years, up to $40 billion will be invested in rental supply via programs like the Apartment Construction Loan Program and Housing Accelerator Fund. Toronto alone expects 8,872 new purpose-built rental units to be delivered in 2025, the most in decades.
Meanwhile, Urbanation and FRPO (The Federation of Rental-Housing Providers of Ontario) estimate 55% of existing rental sites in the GTHA can support infill development, representing potential for over 182,000 new units.
What It Means for Renters
At first glance, Purpose-Built Rentals (PBRs) might seem like a win for tenants. Many advertise generous move-in incentives, 1 to 3 months of free rent, gift cards, or free parking, but the real cost kicks in later.
Here’s the catch: PBRs are run by institutions, pension funds, REITs, and private equity firms, who are in the business of maximizing shareholder returns, not offering long-term affordability. Because these buildings are newer than November 2018, they’re exempt from Ontario’s rent control guidelines. That means landlords can increase rents by any amount once your lease is up, provided 90 days' notice is given.
📍 Real examples from tenants across Toronto:
In buildings like The Selby (Sherbourne & Bloor) or The Livmore (Bay & Gerrard), renters have reported rent hikes of 10%–15% in year two, well beyond the Ontario guideline of 2.5%.
At eCentral at Yonge & Eglinton, tenants moving in with 2-month incentives found themselves paying up to $300 more/month when renewing.
Similar stories are being shared from Forma at Yonge & College, The Parker at Yonge & Eglinton, and even new buildings along Front Street in downtown's East Bayfront.
In addition, monthly costs are higher in many PBRs:
Utilities (water, hydro, and even heating/cooling) are often extra and based on usage, not bundled like older buildings.
Service fees like locker maintenance, pet cleaning stations, digital concierge, or package room access may not be disclosed upfront.
Bottom line: Ask current tenants what their rent is now, not just what it started at. Incentives might mask the real affordability challenges after year one.
What It Means for Buyers on the Sidelines
If you're currently renting or waiting for the “right time to buy,” this shift toward institutional rentals might impact your timeline more than you think.
As more units shift from ownership (condos) to long-term rentals (PBRs), we may see less inventory available to purchase in the coming years. Developers are choosing the steady returns of institutional leasing over pre-construction volatility. That means fewer units for sale, and the ones that remain may come with premium pricing due to scarcity and larger floor plans aimed at end-users.
So, while it might feel safer to “wait and see,” many buyers may find themselves competing for a shrinking pool of ownership opportunities, especially in core areas with good transit, schools, or future growth.
For renters who plan to stay in Toronto long-term, owning could offer more control and cost certainty than jumping from lease to lease under fluctuating rents.
Here’s My Role
Whether you're a first-time buyer, growing family ready to upsize, planning for retirement I’m here to guide you every step of the way. I’ve helped hundreds of buyers and sellers make informed, confident real estate decisions in Toronto.
Toronto real estate is transforming, but those who understand the rhythm of the cycle, not just the noise, will be the ones who thrive.
📩 Reach out if you want to chat strategy, timing, or what this shift means for your next move. Let’s make the market work for you.
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