What Is Toronto’s Condominium Vacancy Rate ? (Not 1% That’s For Sure)

March 12th, 2015 · 26 Comments · Property Management, Rental Property

vertical limitThe Emperor Has No Clothes. I’m not sure where the myth started that the condo vacancy rate was 1% (Give or take a few decimal points).  I have calculated the vacancy rate according to properties under my management and dug up a CMHC Condo Owner’s Survey so keep reading to the very end.

How To Calculate Vacancy Rate for your Condo

I calculated using time for each condo I manage.  1% of a year would be 3.65 days of vacancy. For a true rate though each condo in Toronto would be vacant for 3.65 days. As a measure of individual condo performance to calculate your vacancy percentage through the years, Take the number of days vacant and divide by 3.65. It’s quite common for the first tenant to move out on the 30th of the month and the new tenant to move in after a lick of paint and minor repairs 30 days later.  That’s an 8.22% vacancy rate.

Another methodology used to calculate a vacancy rate is to call hundreds of thousands of people who own condos and ask them if their condo is empty. For a 1% one person in 100 would have an empty condo.  This is the CMHC way.

My methodology

I manage quite a few properties, so I decided to calculate my own vacancy rate using properties I manage. I wanted a proper calculation so I removed all the houses, I removed all the condos that are outside Toronto. Most of the condos I get are vacant when the owner hires me, so I removed them too.  I only used condos that I have been managing for 2 or more years, that had been rented before 2104 to get an idea of the turn over.

Frankly, I think our rental process is one of the best in the business, once we get 60 day notice, we do a vacate inspection and use the photos we keep on file to put ads up and try to rent the place. We actively try to rent the unit for a day or so after the tenant moves out. That is our goal. We often succeed. I would not expect that this aggressive strategy is used as a general market condition.

I also removed all the new condos and non management properties from the calculation.

An exact 50% of these condos did not have any turnover and so their effective vacancy rate was 0%.  This obviously lowered the average percentage. With these strict criteria, my internal vacancy rate was 3.26% or an average of 11.89 days vacant. This is a best case scenario.

Adding in New Condos

When I added in new condominiums the rate jumped to 11.26% or 112 days on the market. This number also includes one condo that had two vacate periods during the year. The tenant moved out early and then we needed to rerent the condo and another condo where we had a bad tenant who moved out but didn’t turn in the keys, we eventually had to get a locksmith.  These are current market conditions and must be included in any calculation. The rental market does have tenants that are awful.

Market Conditions with a 1% Vacancy Rate

Once you realize how impossibly low a 1% vacancy rate is, you can quickly infer that there must be certain signs to a low rate. I actually know what they are because I’ve been in this business for 20 years and I’ve experienced these conditions as a professional and as a tenant. Here are some of the signs.

  1. As a tenant you would not give notice until you secured a place. The effect of of this was that you were quite likely to pay double rent for 30-60 days.
  2. Tenants were afraid their place would get rented before they found a new place.
  3. As a tenant you would take a place as is and fix it up yourself
  4. Intense competition, I’ve had 80 people show up for a showing
  5. People bring all their documents and cash so they can act quickly and rent the place.
  6. Rental Agents and Supers were offered bribes (Key deposits) to approve applications.
  7. The market was so painful, you did not want to move and would live with almost anything.
  8. Landlords did not fix anything, they didn’t have to.
  9. People would fill out 20 or 30 applications trying to get one apartment.
  10. Buildings had short hours, 9-5 with the office closed for lunch. The tenant would book off work to look for a place.
  11. Rents trended up.

To illustrate this a little further… during my property management school placement on Balliol Street downtown Toronto, I was tasked with accepting tenant work orders and showing apartments. First the only way work of any kind got done in the building was via City Work Order. All work orders were completely ignored except for flood, fire or emergency situations.

This particular incident stood out in my mind, I was showing an apartment and in the laundry room above there had been a leak and the ceiling had collapsed. The hole was very large and moldy. I asked the manager at the time if we could get it fixed. He gave a little laugh and with complete arrogance replied with a scoff “Someone will take it and they’ll fix it”. He was right. One day later that place was rented.

Later on I worked for a company called Macro Properties and to rent a property we would put an ad in the Toronto Star, they paid someone $500 per apartment to answer the phone. The volume of calls was staggering. I would set two appointments per week per vacancy. I would hand out applications and they would bring them back to the head office with a money order for first & last. After one particularly frenzied showing 13 people were at the head office before it opened, with their applications and money orders. I got in trouble from my boss because there were too many applicants and “What do I do with all of them?” The rent was $1600 and it was a 2 bedroom apartment. It was also under construction during the showing. It was not affordable housing.

These glory days for landlords are long long gone. These are not the present market conditions. Not even close.

Current Market Conditions

Renting is seasonal.  It’s been a long winter. Kijiji is now the biggest rental site. It also boasts a current 14,000 apartments & condos & houses for rent. Realtor.ca another 4600 approximately. (Other sites don’t have numbers) It’s no problem to answer my own phone. Before I even take on a property, I will do a market survey. If the price isn’t bang on, you don’t get any calls. These are brand new properties and really decent ones. A few years ago my marketing strategy would get about $100 more than the average.  Here’s evidence that the current vacancy rate is a lot higher than propagandized.

  1. Tenants expect a place that is clean and painted and in good condition.
  2. Buildings have late hours every day and even weekends to make it easy for the tenant to come to them
  3. I require people to confirm one hour ahead of time to make sure I don’t get stood up. I mostly have showings with just one person.
  4. The Toronto Real Estate Board’s own published statistics for the last quarter of 2014 state that 50% of places are not rented. The last quarter of 2014 10,611 of all types of properties were listed and 5036 were leased. How is this possible in a 1% vacancy rate situation?
  5. Tenants shop around and have lots of time to make up their mind.
  6. Competition is fierce for good tenants. Buildings are giving away TV’s, free month’s of rent and other promotions.
  7. It takes more than 3.65 days to rent a place and move a new tenant in.
  8. Rents trending down
  9. No depth to market, poor response to ads, few calls.

All of these existing numbers prove to me that the market is not nearly as tight as 1%.  The evidence says it’s not and as more and more buildings come on the market, it takes months for the area to absorb the 50-60 suites of inventory.

Here’s a few examples out of the last month.

8 Mercer Street is one of the most unfinished buildings I’ve ever rented. There are 20-30 suites available currently and they just opened the 6th floor. So there’s a whack of more floors to provide even more inventory. I put the price to $1599 for a one plus a den at John & Wellington right in the heart of the financial district. I get not one phone call in one week. I drop the price to $1499 I get one call and one inquiry right away. As it turns out, my new resident has seen a lot of suites in the building, she has selected the 07 layout as the best one. She likes the floor it’s on because the door to the rooftop garden is right beside her unit. Does this sound like a tight supply to you?

I listed another unit at 33 Singer Court at Leslie & Sheppard in the Discovery Developments. This group of buildings includes some of the best amenities I’ve ever seen, including a dog spa area so you can wash poochie after his walk. It is also rented now but when I did my market survey there were 27 one plus dens for rent in those buildings.

These are simply not low vacancy conditions.

Quest For The Numbers

In my search for some kind of reliable numbers I emailed CIBC’s media spokesperson about this old article in the Globe that came out in February 2014.  I was told they got the number of 1.7 % raising to a little over 2% from CMHC. So I emailed CMHC and they said they did not know where CIBC got that number from and to ask them.  They also said this was an old article, so then I sent them this horrible article from the Financial Post. Even Toronto Life’s moment (Not available online) quoted this low rental vacancy number.

That Financial Post article needs a full blog post on it’s own to fight the propaganda in it. The only motivation for selling these condo sites to a pension fund as a rental building is because condos are getting harder and harder to sell. Or they are short on cash or some other internal reason. It’s not because of the downtown condo rental market strength that’s for sure.

Then… CMHC emails me this report called the Condo Owner’s Survey in which they just called thousands of people and ask if their units are vacant, under repair, or occupied. You can read the whole thing or you can skip to page 6 table 9 which states a vacancy rate of 6.9% or page 9 table 19 which has a vacancy rate of 10.1 % for condos purchased in the previous three years and around 5% for the rest.

This report was published in August of 2014 but surveyed 2013 obviously. Due to the nature of the rental market it’s really hard to get a more recent survey. I doubt that the thousands of investment condos that have come out since then have improved the vacancy rate. The vacancy rate has gone up from the 6.9% or 10.1% rate quoted by CMHC.

Deceptive Marketing 101

I’m sick of hearing about the low low condo rental vacancy rate. It’s a complete fabrication and has been for years. If anyone knows where this information comes from I’m all ears. Probably Brad Lamb in 2012. Who knows. The CMHC report is the best source we have for a true vacancy rate for condos in Toronto. The only people who benefit from this astonishingly inaccurate statistic is the real estate developer, one with a lot of condos to sell.

As someone with experience in navigating the difficulties of renting and managing these new condos, I think it’s time for the Bad News Fairy to sprinkle the condo market with a healthy dose of reality. It’s almost a yard sale out there, with condo owners having to adjust their price expectations as tenant shop for the best deal.  The vacancy rate is closer to 10% than to 1%.

Feel free to question my numbers and methodology in the comments.

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26 Comments so far ↓

  • Tony Maresch

    Wonderful article. Thanks.

  • Joe Q.

    I came to this post late. Here is a link to the CMHC’s rental market reports:


    It has been a while since I looked in detail at the vacancy stats, but this report (from fall 2014) reports 1.6% vacancy for the Toronto CMA.

    The thing to understand about the CMHC vacancy reports is that their definition of “vacancy” is very narrow. They only count a unit as vacant if it has been physically unoccupied and available for IMMEDIATE rental for a certain amount of time (months, from what I recall).

    They also only count a unit as vacant if it is in a building with three or more rental units, so basement apartments and duplexes are omitted as well.

    Their surveys are done on a “snapshot” basis by telephone over a couple of weeks in the spring and fall. So results may also become skewed if owners intentionally mislead the survey-takers on the status of their unit (e.g., by claiming it’s not a rental unit). A systematic error may also be introduced if there is a lot of seasonality to vacancy rates.

    Overall, my personal opinion (as someone who is neither a RE investor nor a statistician, but has always been suspicious of these numbers) is that the CMHC vacancy stats may be useful in a LONGITUDINAL comparison (e.g., looking at how vacancy rates have changed over time) as long as you are comfortable assuming that response rates, seasonality, and housing stock mix stay constant over time. As a snapshot-type picture of vacancy rates at a single point in time, the CMHC numbers are very questionable.

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  • Mark

    I heard you are really into anal ?

  • Nadine Lumley

    Why do realtors control Canada’s ‘official’ housing market data?

    Housing numbers are prepared for and by the industry in question. The data is unregulated and unaudited. CREA aggregates sales totals from the country’s real estate boards and trusts they are reporting correctly (THEY ARE NOT). Researchers’ access to the raw data is limited, making it difficult to verify or to conduct second-level analysis.



  • Ali Akhtar

    I think we really need that new investors are well aware and provided correct information. When I was in market to invest….this realtor was very insistent on selling me new condo and convinced me that I will make 20% per year while i wait for construction. that did not happen due to over construction.

    I feel that these realtors are part of the reason of this glut…was I guided correctly, he should have sold me existing inventory and builder would not have gone on to start selling more projects.

    Builders pay 4% commission to selling agent and buyer’s agent get 2.5% commission so go figure….unnecessary overbuilding due to incentive structure.

    • Rachelle

      That is the truth.

    • Joe Q.

      The fact that a RE agent can make claims about how much money their client will make is very telling. If people in the financial industry do this (stockbrokers etc.) they are penalized. It is considered unethical, and is illegal.

      • Ali Akhtar

        if you hear this argument you would be convinced too. So here goes. I put 20% deposit for 4 years with no mortgage. Price of home appreciates atleast 4%…and that would be 20% return on my 20% down. but low and behold even this mediocre 4% was not achieved due to over construction while house prices keep going up as hell.

        it was not get rich quick kind of scheme and my analysis was not incorrect at that time. i was not wrong about location and theory was that with the start of QE at that time asset prices would bubble which did happen but not unfortunately with condos.

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  • Ali Akhtar

    when he was selling me and I was skeptical because price was 15% higher then what was around. He said I will not lose money and said I have to move it right? I will move it!

    now when I had my unit and I wanted to sell….Ali you know your product is not in demand what do we do?

    I bought this condo for 358k in 2010 and today it is worth 360k in most realistic scenario….now again I pay 4% for selling and I am sitting on 15k loss after 5 years of holding this.

    A house that was selling for 358k in 2010 is now selling for 468k….implying 104k I have lost over all these years and I am getting picture that holding another 5 year will only increase my loss. We really need to stop new projects…how the heck are they even getting approved? Aren’t city planners aware of this glut and keep approving new projects? Maybe city thinks they need all these in the future but this should not be done at cost to average prudent investor\saver….I put down 75k of hard earned cash on this.

    stories like mine should be more on headlines but they don’t. but i see some hope as you are conversing with big media names now.

    • Rob

      Why did you buy it? You believe someone who guarantees 20% returns? lol Have you heard of Bernie Madoff?

      • Rachelle

        Actually please stop blaming the victim. There are a large amount of people being misled by people looking to take all their money away. These are not sophisticate investors and they do deserve protection.

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  • Vic F.

    This article rings so true with me. I have a one bedroom plus den at Yonge/Bloor which I was able to rent out at $1,700/month in 2013 in only one week. That tenant has given me notice and for the past month I’ve been trying to rent it out. Lot’s of people came by to view it, but no offers. It appears that a lot of new condo projects have completed since 2013, so now people have more choice. I guess I’m going to have to lower my rental price by a few bucks and see what happens.

    • Rachelle

      Yes, just keep going down till you get a decent amount of showings.

      • Vic F.

        While we’re on the topic, I’m trying to sell a 2-bedroom condo in the Entertainment District (one of the Brad Lamb) condos. It’s been listed for about a week on MLS but only one viewing so far.
        My own experiences in real estate jive with a conversation I had with a friend of mine who’s a real estate agent/broker. He told me that he’s selling all his real estate investments and is temporarily exiting the business because he things that the shit’s going to hit the fan pretty soon vis a vis a large correction in the condo market.

        • Ali Akhtar

          Vic, I think condos are undervalued relative to houses right now. in 2010 price of 1.6 condo equal to one detached house. today this ratio is sitting at 2 condo equal to one detached house.

          basically, we will enter phase of under building condo for next few years that would correct this ratio to historic norm of 1.8. that is my opinion ofcourse.

          currently cap rate of condo is 3.8% vs house yield of 2.8% from the samples I calculated with.

          selling now would probably a bad idea as you would sell at a loss probably so shit has already happened in my opinion 🙂 wait for better times.

        • Rachelle

          Yeah, it’s hard to say what the future holds all one can really say is that the market is not operating according to the economic fundamentals and this is mostly because every time we get close to a correction the government steps in to moderate the situation and kick the can further down the road. In reality when the shit does hit the fan, the rental market will tighten up big time.

  • Letran

    I understand that the article is over a year old. Is it still true. I briefly heard in the news that the rental rates are going up? I own a 1 bedroom in the Financial and one in the Entertainment districts. I’m thinking of raising rent 🙂

    Maybe it is time to buy and cash out?

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