I don't quite understand the often made claim that there is simultaneously a dearth of 2+ bedroom apartments in Toronto, as well as a huge demand for them, as well as them being unprofitable for developers.
Shouldn't savvy investors be able to see the market opportunity and put money into larger units?
Its a misalignment where you're talking about private citizens having an incredible demand for something that's only sold in a marketplace flooded with financial speculators. One group wants a place to live that's permanently affordable at their income, the other group bought what boils down to a financial option contract on the hopes a greater fool will pay twice as much for the commodity next year. Those groups can't coexist in the same neighborhood or marketplace.
The city I live in only builds 1%er apartments for investors, and construction is absolutely booming for them, which is very nice for those investors. Those are some very nice empty condo towers. The market for the lower 99% percentile income is totally separate and different, and frankly empty. There is no crossover.
Perhaps its like gold, in that its a commodity for investment but once price exceeds practical use levels for connector plating and tooth capping, its no longer relevant to the practical use fields at all, and its price can completely decouple and head to the moon. At some point the concept of owning a box full of air downtown will completely decouple from the concept of a place where humans live. At that point investment prices can and will go infinite with no effect on human housing, solely dependent on national fed rates and international currency exchange rates.
2+ BR apartments rent for less per square foot than 1 BR and studios. If demand for 1 BRs isn't being fully met, then there's no reason to consider building larger apartments.
Shouldn't savvy investors be able to see the market opportunity and put money into larger units?