The condo market in Toronto and Vancouver: A home, an investment and increasingly a rental property

For those Canadians who can afford the down payment and meet their monthly mortgage costs, homeownership is a tremendous wealth generator. For example, the median net worth of the two-thirds of Canadian households (66.5%) who owned their own home in 2021 was over 28 times larger compared with households that did not ($685,400 versus $24,000).

A condo is often the first rung of the property ladder

A condo is generally the lowest rung of the property ladder and is the most affordable option for first-time buyers looking for a place to live in Toronto or Vancouver while building equity. Over one-third (37.8%) of first-time home buyers in British Columbia and just under one in six in Ontario (16.5%) bought a condominium in 2019.

A condo is also the most affordable option for those looking to invest in real estate and become a landlord, either through short- or long-term tenants. Over half of occupied dwellings in the downtowns of Toronto and Vancouver were condos, and more than half of these condominiums were rented.

Approximately half of the condos built in Toronto and Vancouver from 2016 to 2020 were used as investment properties

A recent study from the Canadian Housing Statistics Program showed that two in five condominium apartments in Nova Scotia, New Brunswick, Ontario, Manitoba, and British Colombia were used as an investment property. Whether a condo is used as a home or as an investment property depends very much on when it was built.

In the Toronto metropolitan area, almost one-quarter (24.1%) of condominium apartments built in 2000 or earlier were used as investment properties in 2020. This rate rises to 40.1% for condos built from 2001 to 2015, and to over half (55.2%) for those built from 2016 to 2020. In downtown Toronto, almost three in five condos built from 2016 to 2020 were bought as investment properties.

In the Vancouver metropolitan area, over one-quarter (27.0%) of the condos built in 2000 or earlier were used as investment properties in 2020. The rate rises to over one-third (37.6%) for condos built from 2001 to 2015 and up to almost half (48.1%) for those built after 2015.

Investors on average own smaller condos

Size matters when it comes to buying a condo as a home or a rental property, with those who live in the property buying a larger condo on average compared with those who buy as an investment property.

In 2020, the median size of condominium apartments in the Toronto metropolitan area was 822 square feet, while the size of those used as an investment in the same metropolitan area was 711 square feet.

In Vancouver, the median living area of condos in 2020 was 849 square feet, compared with 769 square feet for those used as an investment property. 

Condos built in Toronto today are a lot smaller than those built in the 20^th Century

Condos built in Toronto today are generally a lot smaller compared with those built in the late 20^th Century. For example, condos built in the Toronto metropolitan area from 1971 to 1990 had a median size of approximately 1,000 square feet. Conversely, condos built in Toronto from 2016 to 2020 were approximately 400 square feet smaller, with a median size of about 650 square feet.

Condos built in Vancouver since 2000 are on average larger than those built in Toronto since 2000

Condos built in the Vancouver metropolitan area during the 20^th Century were on average smaller than those built in Toronto. Since 2000, however, condo sizes in Vancouver have consistently exceeded those in Toronto. The median size of condos built in Vancouver from 2016 to 2020 and owned as an investment property averaged 729 square feet—almost 100 square feet larger than those in Toronto—while for non-investment condos, the median size in Vancouver was 816 square feet, 139 square feet larger compared with Toronto.

As was the case in Toronto, condos built in downtown Vancouver from 2016 to 2020 were on average smaller than those built in the metropolitan area as a whole, with condos owned as an investment property having a median size of 615 square feet. 

Typical landlord in 2020 is a couple living in a big census metropolitan area and working

If we look more broadly to all property owners in Canada with rental income (not exclusively condo owners), we find that the typical landlord in 2020 is not a faceless corporation, but a middle-aged, middle-class couple. 

In 2020, just over four in five rental income earners owning any type of property were in couple families (81.0%), close to half were aged 45 to 64 years (46.7%), with approximately one-third living in the metropolitan areas of Toronto (21.2%) and Vancouver (10.7%).

Approximately two out of three rental income earners (66.0%) also received wages, salaries and commissions, similar to the share of tax filers without rental income (64.6%). However, the median wage, salary and commission income of rental income earners with wages was almost two-thirds higher in 2020 compared with tax filers without rental income ($59,800 versus $38,570).