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The Toronto region has the highest proportion of renter households in Canada that don’t have enough room for all their occupants, a sign the city’s continuing rental crisis is forcing some tenants into cramped conditions to make ends meet.

Just over 133,000 renter households in the Toronto area, or 20 per cent of all tenant households not in social or affordable housing, said their dwellings were “unsuitable” in 2018 – meaning there were not enough bedrooms for everyone living there, according to results from a recent Statistics Canada survey.

The next highest were the Winnipeg and Regina areas, at 15.3 per cent each, while the national rate of unsuitable rental housing was 9.6 per cent.

“I’m not surprised at all” by Toronto’s numbers, said Michelle German, vice-president of policy and strategy at WoodGreen Community Services, a provider of affordable housing and other social services. “There’s this total mismatch in the market, between what people are living in, what they want and what they’re aspiring to.”

Over decades, developers have largely abandoned purpose-built rental construction in favour of condominiums in markets across the country. But the shift is particularly severe in Toronto.

In January, a City of Toronto report said roughly 80,000 new condo units came onto the market over the past decade, compared with just 4,500 purpose-built rentals.

Many of those condos wind up on the rental market: One-third of the Toronto area’s condos are used as rentals, versus 19 per cent in 2007, according to the Canada Mortgage and Housing Corp.

The trouble is condos have gotten progressively smaller. For condos built between 1981 and 1990 in Metro Toronto, the median size is close to 1,100 square feet, according to Statscan. But for units built in 2016 and 2017, the median size is 647 square feet.

That’s because, with home prices so steep, developers have responded with smaller units that are comparatively more affordable, while also allocating more of a building to bachelor and one-bedroom units, said Shaun Hildebrand, president of research firm Urbanation.

“What was once considered to be a one-bedroom [in square footage] is now in some cases being squeezed in as a two-bedroom,” said Mr. Hildebrand.

During a time of meagre purpose-built construction, the Toronto region has posted some of the strongest population gains on the continent, ensuring rental demand is robust. In turn, vacancy rates have dropped to around 1 per cent and rents are increasing rapidly.

The average rent of a purpose-built two-bedroom rose 5.2 per cent in 2018 from a year earlier, to nearly $1,500 a month, according to CMHC. For a two-bedroom condo, it was roughly $2,400 a month. (Other sources suggest prices are considerably higher.)

Thus, to keep housing costs low, many renters sacrifice on space.

For five years, Matt Slaman shared a one-bedroom apartment in Toronto’s core, with his bed in a sectioned-off area of the living room. Eventually, his girlfriend moved in, and friends often crashed for the summer on a couch. While the rent was reasonable – all in, it was $1,250 a month plus electricity – there were also obvious drawbacks.

“You’re always surrounded,” said Mr. Slaman, a 31-year-old theatre producer. “You don’t really have any privacy.”

In September, he and his partner moved out, but found the rental market had become “outrageous.” Their 540-square-foot one-bedroom unit, in a purpose-built apartment building, costs $2,000 a month.

“It’s really not affordable in the long term,” he said.

Some relief could be on the way. The average size of new condos is stabilizing, or even increasing, said Mr. Hildebrand, as developers look to capture demand for larger units.

More importantly, builders are starting to embrace purpose-built development at levels unseen in decades. There were roughly 3,300 rental unit starts in the Toronto area last year, the highest since 1993, according to CMHC. And rental units, on average, tend to be larger than condos.

“It’s creating more opportunities for renters to stay in the market and not have to squeeze themselves into a small studio for a lengthy period of time,” said Mr. Hildebrand.

Still, Metro Toronto’s population grew by roughly 150,000 over the past year. Recent gains were entirely driven by international migration and immigrants tend to rent early on. Further, population flows show few signs of subsiding.

To satisfy Toronto’s demand, three times as much rental construction is needed, Mr. Hildebrand told The Globe and Mail in July.

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