Interest in multi-unit homes leads to rise in Toronto housing starts: CMHC

“It looks like the real estate market is really rebounding this winter from a very slow fall,” said Andre Sorensen, a professor of urban geography at the University of Toronto, who was not involved in the report. He noted that multi-unit dwellings are a more affordable and highly coveted option for homes in the current market.

In Toronto, housing starts rose 10 per cent year-over-year, though they fell 25 per cent from February.

Meanwhile, in Ontario home starts dropped five per cent year-over-year, although the province led the country in the number of new homes built. 

Nationally, the actual number of housing starts rose nationally to 17,052 from 14,756, though the report says the seasonally adjusted number as being down seven per cent. 

The CMHC said they were unavailable for an interview to discuss this report, but earlier this month released a statement forecasting that high interest rates would make this year a difficult one for builders to start new rental projects. 

“After reaching historically high levels in recent years, housing starts in Canada are expected to decline in 2024, before recovering in 2025 and 2026, reflecting the lagged effect of higher interest rates on new construction,” the CMHC said in a statement earlier this month.

Murtaza Haider, professor at Toronto Metropolitan University’s Ted Rogers School of Management, attributed Ontario’s drop in housing starts to the high cost of construction and the scarcity of land available for development in the province.

When it comes to national figures, Haider says the number of actual housing starts tells a different story than the seasonally adjusted figures. “I would say it’s a positive thing to see that starts have gone up by such a large amount, 16 per cent,” he said. “That’s a sizable increase.” 

This increase in the actual number of starts — and the 10 per cent year-over-year rise in Toronto, which saw 3,494 actual housing starts last month compared to 3,182 in March 2023 — could be the result of a number of factors, he said, including the expectation of interest rates coming down soon and unusually warm weather, which creates better conditions for construction to start. 

Multi-unit dwellings, including condos and apartments, powered growth in Toronto home starts, with a 13 per cent increase in actual housing starts last month from March 2023. Starts for single detached homes fell 12 per cent in March 2024, compared to the previous March.

Because most apartment and condos have one or two bedrooms, Haider said a scarcity of other types of housing could mean families looking to grow won’t be able to find a larger home.

“Millennials will start having their second babies, and the second child will necessitate the need to move out of an apartment or condominium into lowrise housing,” he said.

“If that demand accelerates … but the supply side doesn’t catch up, then we would see greater pressure, on lowrise housing or single-family-oriented housing in the future because we will be generating more demand and not as many houses.”

Earlier this month, Royal LePage reported that Toronto home prices are set to overtake Vancouver by the end of the year, in part due to scarcity.