Montreal's rental market is telling two contradictory stories simultaneously. While the city grapples with a severe shortage of affordable housing, a surplus of empty luxury apartments is growing. This fragmentation is prompting housing advocates and industry experts to call for an end to relying on a single, average vacancy rate to gauge the health of the city's housing market.
The Deceptive Average: One Number, Two Realities
The Canada Mortgage and Housing Corporation's (CMHC) 2025 annual rental market survey, released on December 11, 2025, presented an average vacancy rate of 2.9% for the greater Montreal region and 3.1% for Montreal Island. On the surface, this suggests the market is nearing the balanced threshold of 3%, where rent increases might begin to stabilize.
However, this average masks a stark polarization. A deeper analysis of the same data reveals a 5.9% vacancy rate for luxury apartments in the Montreal region for 2025. In stark contrast, the vacancy rate for the larger pool of apartments deemed affordable was a mere 1.5%.
"You have to take the vacancy rate with a certain grain of salt," said Émile Boucher, a community organizer with the Regroupement des comités logement et associations de locataires du Québec (RCLALQ). "When we think of the vacancy rate as one, we're not differentiating which units are vacant. You have to minimally look at the two vacancy rates — for affordable apartments and for more expensive apartments."
Consequences of a Polarized Market
The disparity has tangible effects. The scarcity of lower-rent units continues to fuel the affordable housing crisis, while an oversupply of high-end units has led some landlords to offer incentives like one to three months of free rent to attract tenants. Despite these promotions, the base rents remain inaccessible for a large portion of the population.
Furthermore, rents for both affordable and luxury apartments in the region rose well above the inflation rate again in 2025. Boucher argues that fixating on the average rate of 2.9% obscures the true crisis, which has two dimensions: a lack of low-rent apartments and the financial strain on tenants who spend a disproportionate amount of their income on housing.
"The vacancy rate is a very limited variable," Boucher emphasized. "Thinking that if we reach a three per cent or 3.5 per cent average vacancy rate we'll have some miraculous solution... it completely ignores the reality for most tenants — those who are paying too high a proportion of their revenue on rent."
The gap is also geographical. For example, the CMHC data shows a vacancy rate of 8.3% for two-bedroom apartments in downtown Montreal and Nuns' Island, areas known for higher rents. Meanwhile, in Montreal North, one of the island's poorest neighbourhoods, the vacancy rate for similar units was a critically low 0.9%.
A New Reality Demands New Metrics
This phenomenon of dual rental markets is relatively new, driven by a recent construction boom of high-end apartment towers, fueled by federal incentives and a cooler condominium market. Martin Messier, president of the Association des Propriétaires du Québec, agrees that the average rate, while providing a global picture, is no longer sufficient alone.
"You have differences in the market that you didn't see in the 1990s," Messier noted. "You have to go further in the analysis and not just say the global vacancy rate is 2.9 per cent."
Francis Cortellino, a CMHC economist responsible for Quebec, explained the historical context. In the past, a high vacancy rate of 7-8% correlated with minimal rent increases, while rates below 2% triggered hikes above inflation. A rate around 3.5-4% typically aligned with inflation-level increases.
However, Cortellino cautions that "there's no magic number" for immediate affordability. Even if the market reaches balance, the affordability crisis will persist because rents have risen so sharply in recent years. "If rent increases can be slower in the next few years, you hope that household income starts to catch up a little bit," he said. "And then the market becomes less unaffordable."
The growing consensus is clear: to understand Montreal's true housing landscape, the simplistic average vacancy rate must be retired in favour of a more nuanced view that separates the realities of the luxury and affordable segments.
