A report from Canada Mortgage and Housing Corp. (CMHC) suggests it might be time for Ontario cities to rethink the apartment-heavy rental supply with an injection of more family-friendly row houses, which currently account for only 5.3 per cent of purpose-built rentals.

The Housing Market Insight report on row house rentals in Ontario comes amid a revival of development interest in purpose-built rentals in cities such as Toronto, where many families live in apartments and condos without enough bedrooms.

“There’s not a lot of attention paid to rows. When you think about rental you often divert right to apartments. It was interesting to find there seems to be need for larger dwelling types. We do want to densify housing but row (houses) are also a form of dense housing that do accommodate the needs of a certain population,” said the report’s co-author, senior analyst Christopher Zakher.

But land prices aren’t necessarily conducive to building lowrise rentals, he said.

CMHC’s look at the Toronto, Ottawa and London Census Metropolitan Areas found that overcrowding disproportionately affects immigrant households. In the Toronto area, 40.5 per cent of recent immigrants renting apartments were considered unsuitably housed — living with fewer bedrooms than CMHC considers appropriate. That compares to 21.2 per cent of recent immigrant renters living in row houses.

As the cost of home ownership climbed between 2006 and 2016, the number of rental households rose 24 per cent. But by then the supply of purpose-built rentals was already diminished by the previously rising rate of home ownership, Zakher said.

“A lot of owner-operators of these rental row homes were experiencing higher vacancy rates as a result of people transitioning to home ownership following the recession of the early ’90s. They didn’t see much cream in the crop in terms of maintaining that product so they liquidated it ... and it hasn’t really picked up,” he said.

Most row house rentals are three-bedroom units that cost more than apartments, which are predominantly one and two bedrooms.

Condo townhouse rents are 11.4 per cent higher on average in Toronto than purpose-built rental row houses, CMHC says. The mortgage carrying cost on a resale Toronto-area townhouse would be about $3,406 a month, about double the average row house rent of $1,688.

Stacked townhome rentals could be attractive to developers if they came with reduced parking requirements and without the high cost of underground parking, said Ben Myers of Bullpen Consulting, a real estate advisory company. But land costs make it unlikely even in more suburban GTA areas.

“On the apartment side, most developers want to do at least five or six storeys. But I haven’t seen (many) applications for lowrise rental product. Almost anyone that is looking at doing rentals is looking at doing a tall midrise, 12 or 16 storeys, or highrise,” he said.

Even three-bedroom apartments are likely less than 1,000 square feet, Myers said.

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“The larger the unit you build, the lower the rent per square foot. A developer wants to maximize the rent per square foot that they’re generating and they want to make sure the units lease up quickly,” he said.

CMHC’s study does not include government subsidized housing.