This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
CMHC just released their Spring 2026 Housing Supply Report and one number jumped out immediately. For the first time ever, small plex style buildings in Toronto outnumbered large condo towers in new construction starts. A lot of people called it a turning point for housing supply in the city. And in some ways it is. But the full picture is more complicated than that headline suggests, and for Toronto real estate investors, the details are what actually matter.
This post breaks down what the report says, what it leaves out, and what the gap between today’s supply numbers and tomorrow’s demand means if you are actively building a multiplex portfolio in Toronto right now.
Canada Built More Homes in 2025. Toronto Built Fewer.
The national headline number from the CMHC report is that Canada built 6% more homes in 2025 compared to the year before. For a country dealing with a long-running housing shortage, that sounds like progress. But the national number masks what is happening at the city level, and Toronto specifically moved in the wrong direction.
Toronto built fewer homes in 2025 than it did the year before and ranked last among all major Canadian cities on a per person basis. Lower than Calgary. Lower than Montreal. Lower than Vancouver. For a city with Toronto’s population size, wage levels, and sustained housing demand, that is a significant problem. It means the gap between how many people need housing and how many units are being created is not closing. It is widening.
This matters for investors because housing supply directly affects rental demand, vacancy rates, and long-term property values. When a city is consistently under-building relative to population, the structural case for rental income properties stays strong. Toronto’s construction numbers in 2025 reinforce that case rather than weaken it.
The Missing Middle Growth Is Real But Needs Context
The most talked-about finding in the report is that small plex buildings with three to five units now make up roughly half of all apartment style buildings started in Toronto. That is a genuinely meaningful shift. The missing middle, meaning the category of housing between a single family home and a large condo tower, has historically been underbuilt in Toronto for decades. Seeing it reach near parity with condo construction is a real change.
But the percentage needs to be understood alongside what happened to condo construction at the same time. Condo starts dropped sharply in 2025 as pre-sale demand dried up and financing became harder for developers to secure. When one category falls off significantly, every other category looks larger by comparison even if it did not actually grow by the same amount. Some of the missing middle’s gain in share is simply a reflection of condo’s loss, not purely organic growth in small plex development.
The actual unit count matters more than the percentage. An investor looking at the Toronto market needs to ask how many net new rental units are being created, not just what proportion of starts falls into which building type. The percentage tells you about the mix. The unit count tells you about the real supply picture. Both numbers together give you a clearer read on where the market is heading.
Why Missing Middle Construction Is Finally Growing in Toronto
The growth in small plex construction is not happening because builders and investors suddenly discovered a new interest in this property type. The demand to build multiplexes in Toronto has existed for a long time. What was missing was permission. Toronto’s zoning rules made small plex construction difficult or impossible in most residential neighbourhoods for most of the city’s history, and that is what kept supply artificially low for decades.
The rules have been changing in stages. Basement suites were approved in 2000. Laneway suites came in 2019. Garden suites followed in 2022. In 2023 the city approved up to four units on any residential lot without requiring special zoning approval. Mid-rise buildings on major streets received full approval in fall 2025. And in 2025, six-unit buildings received approval across nine wards in Toronto and East York, with development fees waived for buildings up to six units.
That last point deserves more attention than it has received. Development fees on small multiplex projects in Toronto used to add hundreds of thousands of dollars to the cost of a build. Waiving those fees meaningfully changes the economics of new multiplex construction and makes projects viable that would not have pencilled out before. The supply growth showing up in the 2026 CMHC data is a direct result of these policy changes finally working their way through the development pipeline.
Vacancy Is Up and Rents Have Softened. Here Is Why That Is Not the Full Story.
The CMHC report notes that vacancy rates in Toronto are up and rents have softened compared to recent peaks. For investors underwriting new purchases, this is worth understanding clearly rather than reacting to emotionally in either direction. The softening is real. The reasons behind it matter for how long it lasts.
A significant portion of the new rental supply that pushed vacancy higher came from condos that could not sell being converted into rental units. These are not purpose-built rentals designed and priced for long-term tenants. They are units that entered the rental market as a backup plan for owners who could not find buyers. That added supply is meaningful in the short term but it does not represent a structural shift in how Toronto is building housing for renters over the long term.
A second factor is that renters who stayed put during tight market conditions are now moving because they finally have more options. That movement shows up as higher vacancy in existing buildings as units turn over, but it reflects renters upgrading their situations rather than demand leaving the market. The underlying demand for rental housing in Toronto has not changed. Population is growing, ownership remains expensive relative to incomes, and the city continues to attract workers and students at a scale that sustains rental demand regardless of short-term vacancy fluctuations.
Toronto Is Building at Its Lowest Rate Since 2009. That Creates a Future Shortage.
The most important forward-looking number in the CMHC report is this: Toronto is currently building at its lowest rate since 2009. That matters because there is a significant lag between when a project starts and when someone actually moves into a completed unit. What is not being built today does not show up as a shortage immediately. It shows up two, three, or four years from now when that pipeline of units fails to arrive.
Montreal is a useful comparison for understanding where Toronto’s missing middle story could eventually go. Approximately 75% of Montreal’s housing stock is low-rise multi-unit buildings. That density took decades to accumulate. Toronto is currently under 20%. Closing that gap is a multi-decade project, not a few years of construction activity. Investors who understand that timeline can position themselves ahead of the demand that comes with it.
If immigration policy increases intake again, if pent-up household formation accelerates, or if the economy strengthens and more people move to Toronto for work, the demand side of the equation will grow faster than a construction pipeline running at 2009 levels can absorb. That is the structural opportunity sitting in front of Toronto multiplex investors right now. Prices have adjusted down from recent peaks, the regulatory environment for small plex development is the most favourable it has ever been, and the long-term supply picture remains undersupplied relative to demand.
What This Means If You Are Buying a Toronto Multiplex in 2026
The CMHC Spring 2026 report is being read by most people as a housing supply success story. And there are genuinely positive signals in it. Zoning reform is working. Small plex construction is growing. Development fee waivers are changing project economics. Those are real improvements that will matter over time.
But Toronto still ranked last in housing construction per person among major Canadian cities in 2025. The city is building at its lowest rate in over 15 years. The rental supply softening is partly driven by unsold condos entering the rental market rather than purpose-built units. And the missing middle, while growing, is starting from a very low base relative to cities like Montreal that built this way for generations.
For a multiplex investor, this report confirms rather than changes the investment thesis. Rental demand in Toronto is structurally supported. Supply is not catching up fast enough to shift that. Prices have come down from recent highs. And the rules now allow more units on a single residential lot than at any point in Toronto’s history. That combination of lower entry prices, stronger zoning, and persistent demand is the window that serious investors are looking at right now.
At Elevate Realty, we are Toronto multiplex investors ourselves. We understand the numbers, the risks, and the strategy required to reposition capital intelligently.
Our brokerage specializes in Toronto multiplexes. We’ll help you find deals, crunch the numbers, and guide you through renovations and management. If you want full support in Toronto multiplex investing, our team can help you:
- Find high-potential properties
- Crunch the numbers so you know exactly where you stand
- Coach you through renovations to maximize returns
- Lock in great tenants
- Provide full property management so your investment runs smoothly
Book a strategy session with us here and let’s map out the smartest move for your portfolio.
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