Ontario single family housing completions in the most recent quarter. That is the lowest point on the CMHC chart going back to 1990. Ron Butler surfaced it. Daniel Foch called the read. Today, what a 36 year low in single family construction means for a private REIT sitting on the receiving end of that shift.
PV, Mit & Jeff
A 36 year low in single family completions is not a housing statistic. It is a permanent renters demand curve, forming right now, that our rental portfolio sits directly underneath.
On Tuesday, Ron Butler at Butler Mortgage pulled a CMHC completions chart of Ontario single family housing and posted it publicly. Quarterly bars going all the way back to 1990. The last bar on the right, coloured red, is barely visible against the axis. His three word caption: Ontario has just stopped building single family homes.
A couple of days later, Daniel Foch, one of the more respected independent housing analysts in the country, quoted the chart back with the following read.
Two numbers frame the whole picture.
Every household in Ontario that would have bought a single family home in a normal year, in a normal cycle, at a normal building rate, does not have that option anymore. The unit did not get built. It is not coming.
That household does not disappear. That household rents.
Foch's line, we are becoming a renters economy at the fastest pace ever, is not hyperbole. It is the description of what happens when the exit product for renters, the affordable single family home, stops getting produced.
Historically, Ontario rental demand had a release valve. Tenants would eventually save enough for a down payment, buy an entry level detached or townhome in a mid market city, and rotate out of the rental pool. That freed up the rental unit for the next household. The system worked because the entry level housing kept getting built.
That release valve is now closed. The tenant renting today does not have an entry level detached to graduate into three years from now. They rent longer. And behind them, more households arrive into the same rental pool with the same locked door in front of them.
The math is not subtle. Same rental supply. Structurally longer average tenancy. And a growing wave of new households that would have been owners in every previous cycle and are now permanent renters. That is rent inflation at the workforce end of the market, structurally, for as long as the chart stays where it is.
500 Units · Southern Ontario Transit Corridor · Workforce Rent
$1.5M Tranche 1 · Closing in weeks · Accredited investors and existing FC investors only.
FCPRET is a Southern Ontario rental REIT. Not a single family exposure. Not a condo speculator. Purpose built rental across London, Chatham, Ingersoll, Windsor, and Wallaceburg, priced for the workforce Ontarian.
Every household Butler's chart is describing is a household FCPRET's rent bands can house. Not the same tenant who was going to buy the single family home in the peak years, exactly. But the next generation of that same household, priced out of ownership because the ownership market never got built, is now renting our exact building type at our exact rent band.
Foundation Development Fund II Wellington Towers and Foundation Development Fund III are both structured for exactly this reality. Purpose built rental at scale. Workforce rent bands. Transit oriented. Designed to absorb the wave of households that Foch is calling the renters economy and Butler is showing has no ownership exit.
Two reads for the investor side.
On FCPRET, this is the strongest fundamental demand signal we have seen in our entire operating history. Every quarter the single family completions chart stays at these levels is a quarter of accumulated rental demand piling up behind our exact rent band. That translates into low vacancy, longer average tenant stay, and structurally durable NOI growth in the workforce housing segment.
On Foundation Development Fund III, the timing on the $1.5M Tranche 1 currently open to accredited investors is quite literally coincident with the moment a respected independent housing analyst is calling the renters economy inflection point. If the Foch read is even directionally correct, the fund is being launched into the exact demand wave it was designed to catch.
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible · Also Cash
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Our Apartment Building REIT across Southern Ontario. On the receiving end of the renters economy Foch is calling and Butler is charting.
The three trustees on the road from 2023 launch to $10M raised, the rent model evolution, and the road to $20M and beyond.
Have a great weekend,
PV, Mit & Jeff
P.S. The Butler chart and Foch commentary are worth ten minutes on Twitter. Then think about which side of a renters economy chart you want your next allocation on. Reply Chart if you are accredited and want the Fund III offering docs.
