Canada Mortgage and Housing Corporation (CMHC) has released comprehensive research analyzing three pivotal factors shaping the nation's rental housing landscape: rent control policies, Real Estate Investment Trusts (REITs), and tenant evictions. This analysis comes at a crucial time when rental market conditions remain challenging across major Canadian cities.

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The Current State of Canada's Rental Market

The rental housing sector has become increasingly vital as homeownership costs soar in major Canadian markets. Recent CMHC data shows that while Canada's rental supply grew by 4.1% in 2024 (the highest increase in over thirty years), vacancy rates only rose from 1.5% to 2.2%, indicating persistent market tightness.

Average rent growth for two-bedroom apartments slowed to 5.4% in 2024, down from a record 8% in 2023. However, when units changed tenants, rent increases averaged 23.5%, highlighting the significant cost burden facing new renters.

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Key Research Findings on Rent Control

CMHC's international analysis reveals that rent control policies present complex trade-offs. While these measures can provide stability for current tenants, they may create unintended consequences:

• Reduced rental supply in some jurisdictions
• Decreased tenant mobility
• Accelerated rent growth for new and vacant units

The research suggests that cities with abundant rental supply naturally encourage landlords to compete for tenants through better service and competitive pricing, potentially reducing the need for strict rent controls.

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Real Estate Investment Trusts (REITs) Impact Analysis

The study examined REIT involvement in Montreal, Toronto, and Vancouver rental markets, finding:

• REITs control an estimated 6% to 12% of rental market share in these cities
• REIT properties typically locate in higher-cost neighborhoods
• No significant rent price difference between REIT-owned and similar non-REIT properties in the same areas

This finding challenges common assumptions about institutional ownership driving rent increases, suggesting that location and market conditions, rather than ownership type, primarily determine rental pricing.

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Eviction Statistics Provide New Baseline

Using Canadian Housing Survey data from 2021-2023, CMHC estimates that approximately 1% of renters face eviction annually, affecting roughly 49,000 households each year. This data establishes an important baseline for understanding rental market dynamics and tenant security.

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The Role of Private Investment

CMHC Deputy Chief Economist Aled ab Iorwerth emphasized the critical balance between tenant protection and private sector investment: "To increase supply and restore affordability in the rental market, private investment is critical. Although there are legitimate concerns about inappropriate practices by some landlords, they are better addressed by strengthening tenant protections rather than discouraging private investment in rental housing."

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Market Variations Across Major Cities

The rental market shows significant regional differences:

Toronto experienced the lowest rent growth among major centers at 2.7%, attributed to rising vacancy rates and low tenant turnover. The city saw record increases in rental apartment condominium supply.

Calgary continued to lead rent growth at 8.9%, though this represented a slowdown from 14% in 2023. Strong rental demand persists despite recent supply additions.

Vancouver and Montreal showed moderate rent growth patterns, with market conditions varying based on local supply and demand factors.

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Supply Growth Shows Promise

CMHC data indicates that most new rental apartment starts in 2024 were supported by CMHC construction financing programs. Since 2017, over 200,000 new purpose-built rental units have been funded through these initiatives, with support growing from 5% of starts in 2017 to 88% by 2024.

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Looking Forward: Policy Implications

The research suggests that sustainable rental market improvement requires:

1. Continued private sector investment in rental construction
2. Strengthened tenant protections rather than investment restrictions
3. Long-term supply increases to achieve market balance
4. Targeted policies that address specific regional market conditions

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Implications for Renters and Property Investors

For current and prospective renters, the data indicates that while overall rent growth is moderating, significant increases still occur during unit turnover. This creates incentives for tenants to remain in current units when possible.

Property investors should note that the research supports continued investment in rental housing, particularly given government backing for new construction and the ongoing supply shortage across most major markets.

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Conclusion

CMHC's comprehensive analysis provides evidence-based insights into Canada's rental housing challenges. The research supports a balanced approach that encourages private investment while protecting tenant rights, emphasizing that adequate supply remains the most effective long-term solution to rental affordability concerns.

As Canada continues addressing its housing challenges, this research offers valuable guidance for policymakers, investors, and renters navigating an evolving market landscape. The data underscores that sustainable solutions require both robust tenant protections and continued private sector participation in rental housing development.

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For detailed analysis and additional data, the complete research is available in CMHC's Housing Observer publication.