Image of the day: rental completions per capita
They're way up
Rental construction is booming in Canada, almost exclusively due to the favourable financing terms provided by CMHC.
Post on Saretsky’s substack: The Rental Boom.
The boom in rental construction is largely a function of favourable CMHC financing terms. Policy makers have screwed up a lot of things, immigration, taxes, red tape, but one thing they got right was creating the CMHC MLI Select program. The program provides up to 95% LTV on new construction rental buildings and up to 50 year amortizations. Through the stroke of the pen, the government made developing rental buildings more economical and the incentive was enough to unleash the powers of the private sector. As Charlie Munger once said, "Show me the incentives, and I will show you the outcome."
The boom in rental housing is one of the very few bright spots in the housing landscape.
When immigration hit 400,000/yr, I marvelled "Wow! That's 1% per year!"...and then it went way up.
But taking 1% as a round number for every 100,000 people, we get 1000 new heads to roof, requiring 500 homes. So "outpacing population growth" means that on average, fewer than 212/500 = 42% of the new housing-needy want "rental"? And we're building at least 288 homes/100,000 people that are non-rental?