Rising Vacancies, Softer Rents, and What Comes Next with Anthony Passarelli, Lead Economist at CMHC – Southern Ontario

The latest CMHC data show that rental markets across Southwest Ontario – from Windsor to London and Kitchener – are experiencing a noticeable rise in vacancy rates while average rents have softened. A surge of purpose‑built rental projects, driven by the MLI‑Select financing product, has flooded the supply side, especially in London where new units are slated for completion over the next two to three years. Developers with hold‑and‑operate strategies are comfortable with short‑term softness, but the influx of inventory is expected to push vacancy levels higher and rent growth lower than the GTA benchmark.

Demographic trends are reshaping demand. Millennials who once formed the core 25‑34 renter cohort are now moving into marriage, families and home‑ownership, shrinking the pool of prime renters. At the same time, the province’s reliance on non‑permanent residents and student visa holders is waning as federal targets tighten, further reducing rental pressure. Trade‑policy uncertainty along the U.S. border adds another layer of risk; firms in Windsor and surrounding industrial zones are hesitant to expand, and workers facing visa expirations are exiting the market, dampening confidence and employment stability.

Looking ahead, the rental‑construction boom is likely to plateau within the next two to three years as developers respond to softer rents and higher vacancies. Continued support from CMHC’s MLI‑Select program will be crucial to maintain a pipeline of affordable units, but policymakers must also address income‑stagnation for essential workers such as nurses and teachers, whose wages lag behind market rents. Investors seeking exposure should target markets with strong commuter links to Toronto—Hamilton, Guelph and Kitchener—where demand for affordable single‑family homes remains resilient despite broader softness. Ultimately, balanced supply, stable trade relations and demographic‑aligned policies will determine whether Southwest Ontario’s rental market stabilizes or re‑accelerates.