Why Are There Suddenly So Many Empty Rentals? What Ontario's 2026 Numbers Are Really Saying

https://youtu.be/nZPAUezxh6c

There are too many rentals sitting empty right now, builders are quietly slamming on the brakes, and Ontario's population just went negative. So what is actually happening under the headlines?

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I sat down with mortgage broker Dion Beg to dig through the latest data out of the Edge Research Group report, and there are a few things in here worth paying attention to whether you're buying, selling, or just trying to make sense of the noise.

The report we actually lean on

Both Dion and I pay for Ben Rabidoux's weekly Edge report because it's factual, not spin. Graphs and squiggly lines, as we like to call them. That's how we read this market. And this week the lines are telling a pretty interesting story.

Mortgage payments quietly dropped by a third

Start with the one that matters most to real people. At the 2024 peak, the mortgage payment on a typical Canadian home ate up more than 30% of household income. Today it's closer to 20%.

That's roughly a 33% drop in the average payment, and it comes from two things happening at once: interest rates came down and prices came down. Put those together and the monthly number shrinks fast.

This is exactly why Dion is seeing more first-time buyers this year than in the previous two combined. The math finally works again for a lot of people.

What it actually takes to buy in the GTA

Here's the real-world version. For an average entry-level home around $750,000 in the GTA, you're generally looking at a household income near $150,000. When Dion sees an application come in under $100,000, he already knows they're likely shopping a condo in the $400,000 to $500,000 range instead.

None of this is meant to discourage you. It's meant to give you a clear target before you start looking, so you're shopping in the right lane from day one.

Builders hit the brakes

Now the supply side. Ontario single-family completions are down around 30% year over year. Normalized numbers used to sit near 6,000. We're now under 3,000. Roughly half.

Less building means less product on the shelf to choose from. We don't feel it much today, but if this keeps up for a few years and everything else stays the same, single-family values get pushed higher again. Fewer homes, same buyers.

The inventory head-fake

As realtors we always feel like there's a mountain of listings. The data says otherwise. Active MLS inventory in Ontario is actually down since the start of the year.

Go back to April 2024 and you hit what I'd call max pain. Rates at the major banks were around 6.5% and monthly payments were jumping 30 to 40%. That's when a lot of people said "we have to sell." Fast forward to now and fewer people are being forced out, because more of them have found a way to manage the payment.

The tricky part: the sellers who are listing today are often the most stretched. Fewer people in pain, but more intense pain for the ones who are left.

If you're a buyer, know there's less to choose from than it feels like. If you're a seller, remember your competition is thinner than you think.

The population story everyone gets wrong

This one surprised even me. Ontario's population growth has gone negative. But look closer and it's almost 100% driven by non-permanent residents leaving, most of them students on visas after the door on international students was largely shut over the last year.

Here's what matters: the people who actually buy homes are permanent residents, and that number is still strong. We're adding roughly 100,000 new permanent residents to Ontario every quarter, and most of them land in Toronto, Vancouver, or Montreal.

So the slice of the population that drives resale housing is still very much intact. Don't let the scary top-line number fool you.

The rental flood

Now connect the dots. During the low-rate years from 2010 to 2021, the condo market ran hot on investor appetite. When rates got jacked up in 2022, builders couldn't sell those condos, so they repurposed a huge chunk of those towers into purpose-built rentals. That's the hockey-stick line going straight up.

The problem is timing. All those rental units are hitting the market right now, at the exact moment temporary residents are declining. In some markets that's already showing up. Here in Kelowna and the Okanagan, a region of over 200,000 people, vacancy is hitting 8 to 9% in some pockets. A healthy vacancy rate is 4% or less. In a lot of cities we've overbuilt rentals for this exact moment. Ten years from now it'll be a different story, but today there's a real surplus.

Your basement suite now competes with a condo tower

If you're an investor with a basement or a second suite, pay attention. When a management company drops a condo from $2,700 to $2,200 to fill it, that unit suddenly competes with your basement apartment. There's still some savings down there for a tenant, but the jump up to a high-rise condo isn't as big as it used to be.

The pre-construction model is breaking

The Toronto Star ran a piece on this and it's worth understanding. In the current model, a developer has to pre-sell roughly 80% of a building before a bank will hand over construction financing. Builders are fighting hard to hit that number, and a lot of projects are being delayed, postponed, or flat-out cancelled.

Put it in dollar terms the way Dion did. To build a $500 million project, a developer used to put down 20 to 30%, then split their capital across two or three projects to multiply their returns. If the model changes so they have to fund the whole $500 million and sink it into one build for five years, a lot of developers simply walk away.

And if they walk, the pendulum swings the other way. Fewer new condos get built, and a few years out we could be staring at an under-supply. Government policy and lending policy quietly shape all of it.

What this means if you're buying a condo

Two things I'd hold onto. First, buy near transit. There's an old stat from one of my mentors, Don Campbell, that people will walk about 700 to 800 metres to reach a train station or transit line. Buy inside that ring and you protect your resale.

Second, buy with a five to ten year horizon, especially in condos right now. This isn't a flip market. It's a patience market.

Bottom line

There are too many rentals today and not enough new homes being built for tomorrow. Payments are down, permanent-resident demand is holding, and the supply pipeline is thinning out fast. That combination creates real opportunity for buyers and sellers who understand the numbers instead of reacting to the headlines.

If you're thinking about a move this year, let's talk through what these numbers mean for your specific situation.