The Greater Toronto and Hamilton Area is expected to see 6,821 new rental homes completed this year. This is a "multi-decade high", according to Urbanation's latest rental report. Indeed, you need to go back to the 1970s to get rental supply figures of this magnitude.

A big part of this has to do with the fact that we are now taxing rental housing less. Toward the end of last year, the federal government removed their portion of the HST on new rental housing and, then in November, the province of Ontario followed with theirs.

This was "a big first step" for the industry, according to leading apartment developers like Fitzrovia.

But there's another reason that many developers are now looking to purpose-built rentals: fewer people are buying new condominiums. And if you can't presell condos, well then you're going to need to find another path forward for your land.

However, flipping over to rental is not necessarily a panacea. The margins are generally razor thin (+/- 50 bps). It requires more and different capital (typically). And you need to believe in some fairly non-consensus assumptions (high rent growth, low cap rates, etc.).

It'll be interesting to see how many developers are able to successfully flip over to rental and how sustained this rental supply number will be.