How to embrace multifamily housing as a long-term investment
- sasha540
- Aug 14
- 5 min read
Updated: Aug 17
I'm excited to dive into the long-term potential of multifamily real estate in Canada. Despite short-term hurdles such as cooling rent growth and rising vacancies in some markets, experts still see a bright future for this sector.
Canadian multifamily real estate specialists point to the asset class’s resilience—its ability to weather economic cycles while generating steady cash flow. With the country facing a structural housing shortage, this segment continues to offer opportunities for both new and experienced investors.
The Canadian multifamily market has its own dynamics, distinct from the U.S., and understanding them is key to long-term success. While supply pressures and immigration policy shifts may influence performance in the short run, the fundamentals remain strong.
Key Takeaways
Multifamily housing in Canada offers long-term potential even amid slower rent growth and rising vacancies.
The country faces a housing shortfall of roughly 3 million homes over the next decade, requiring 430,000–480,000 units per year—well above current construction levels.
Demand for affordable and mid-market rentals remains strong, while luxury units face slower lease-up.
Successful multifamily investing in Canada requires market knowledge, thorough due diligence, and a long-term strategy.
Navigating current economic cycles and supply-demand shifts is critical to capturing the resilience of the sector.
Understanding the Current Multifamily Housing Market
The Canadian multifamily market saw strong growth through 2023, but momentum cooled in 2024 and 2025. Rent growth is now flat or slightly negative in some urban centres, while vacancies have increased due to elevated new supply.
Recent Market Trends and Performance
Traditional purpose-built rentals and mid-tier apartment buildings have retained solid occupancy rates compared to luxury units. Affordable Class B and Class C properties remain in demand, particularly outside major urban cores, but often require upgrades to maximize returns.
Class A properties—those with premium amenities and prime locations—have been slower to lease in 2025 as tenants face affordability constraints. This creates both challenges and potential buying opportunities for investors with a longer time horizon.
Key Economic Indicators Affecting the Market
Interest rates remain high compared to pre-2022 levels, but many analysts expect gradual cuts through late 2025 and into 2026, which could open refinancing opportunities.
Construction costs remain elevated, slowing new project starts in some markets. Yet, purpose-built rental completions in the past two years have added enough supply to cause short-term vacancy spikes in Toronto, Vancouver, and Calgary.
Supply and Demand Dynamics
The national rental vacancy rate has climbed as new units hit the market, but underlying demand remains strong in mid- and lower-priced segments.
Canada’s population growth—driven by both natural increase and immigration—continues to support the long-term outlook. While caps on temporary residents have eased some near-term demand pressure, the overall need for housing remains well above supply capacity.
Specialized multifamily assets like seniors’ housing and manufactured home communities are gaining traction with investors looking to diversify beyond traditional apartment buildings.
The Long-Term Value Proposition of Multifamily Properties
Multifamily properties remain one of the most stable and defensive asset classes in Canadian real estate. They generate diversified rental income and are less vulnerable to tenant turnover risk than single-family rentals.
Historical data shows that well-located multifamily assets purchased five or more years ago have appreciated significantly, even with short-term market volatility.
Population growth, urbanization trends, and affordability pressures all support steady rental demand, making multifamily housing a reliable long-term wealth-building tool.
Key Multifamily Investment Metrics (Mid-2025)
Metric | Status |
Rent Growth (YoY) | –0.7% nationally; modest gains in affordable units |
Vacancy Rates | Rising; highest in Class A new builds |
New Completions | Elevated in 2024–2025 |
Housing Shortfall | 3 million units over 10 years |
Higher interest rates in recent years have created buying opportunities for patient investors, while improved property technology and data analytics offer new ways to enhance returns.
Essential Factors Driving Multifamily Investment
Population Growth and Demographics
Canada’s strong population growth underpins multifamily demand. Even with temporary resident caps, urban centres continue to see population gains that outpace housing supply.
Employment and Wage Trends
Employment stability and wage growth directly impact rental affordability. While job growth has slowed in 2025, stable employment levels continue to support core rental demand.
Immigration and Migration Patterns
Immigration remains a primary driver of rental demand, particularly in gateway cities. Interprovincial migration toward more affordable markets like Alberta and Atlantic Canada is also influencing regional investment opportunities. This creates a steady flow of potential tenants for
multifamily properties.
Navigating Market Cycles and Economic Challenges
The current market is in a period of adjustment—marked by higher vacancies in some urban cores and slower rent growth.
Savvy investors are taking advantage of this phase to acquire assets at more favorable prices, recognizing that downturn purchases often yield the strongest long-term gains.
Understanding the four market cycle phases—expansion, peak, contraction, and trough—helps position investments for future appreciation.
Multifamily Investment: Strategies for Success
Due Diligence Process
Verify all income and expense statements, review CMHC market data, and assess local economic drivers before purchasing.
Risk Assessment and Management
Plan for at least a five-year hold, maintain adequate reserves, and diversify tenant profiles to reduce vacancy risk.
Portfolio Diversification Techniques
Spread investments across different regions and asset classes to minimize exposure to localized downturns.
Financial Considerations and Funding Options in Canada
Canadian multifamily financing options include:
Conventional bank loans – lower rates, higher down payment requirements.
CMHC-insured financing – competitive rates and longer amortizations for qualified rental properties.
Private lending – flexible but higher cost.
Understanding debt-service ratios, interest rate trends, and refinancing options is critical for sustainable returns.
Property Management and Value Enhancement
Efficient operations, proactive maintenance, and targeted upgrades improve both net operating income and tenant retention.
Value-add strategies—such as renovating suites, modernizing amenities, and improving energy efficiency—can justify higher rents and boost asset value over time.
Market Analysis and Location Selection
Use demographic data, employment trends, and municipal growth plans to identify markets with strong fundamentals.
Markets with limited new supply, strong job growth, and affordability relative to income typically offer the most stable returns.
Conclusion
Multifamily housing remains a cornerstone of Canadian real estate investment. Short-term challenges—like elevated vacancies and rent stagnation—are part of the normal cycle, but the housing shortage, demographic trends, and affordability pressures all point toward long-term strength.
Investors who buy strategically now, focus on stable rental segments, and hold for the long term are well-positioned to benefit from income stability, asset appreciation, and portfolio diversification in the years ahead.
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I am a Victoria-based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty, and hard work have been essential pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!
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