How We Pick Markets: 3 Cities with Mid-Term Upside

In real estate investing, few decisions carry more weight than market selection. The choice of where to allocate capital influences everything that follows, including cash flow, asset appreciation, tenant profile, operational risks, and eventual exit strategies. Rather than chase frothy markets at the peak of their cycle or simply follow population rankings, our approach prioritizes forward-looking fundamentals. We aim to find cities that offer mid-term upside, a three- to five-year window during which macro and micro conditions are expected to tilt favorably for landlords and long-term holders.

This article outlines how we approach market selection and highlights three mid-sized Canadian cities, Halifax, London, and Kelowna, that stand out today. Each has a population of over 100,000 and offers what we consider the best combination of growth potential, supply constraints, economic stability, and demographic shifts that favor rental demand.

Our Selection Criteria: What We Look for in a Market

Our process starts with a filter that weeds out cities based on outdated, backward-looking indicators. Instead, we use a forward-leaning lens with five core pillars:

1. Population Growth and Migration PatternsIs the city growing, and why. We’re not only interested in raw population growth, but in the drivers of that growth. Are people moving in due to job creation, affordability, education, or lifestyle? Migration supported by fundamentals tends to last longer and be less volatile.

2. Employment Trends and Economic DiversityWe look for cities with expanding job markets and economic diversity. A city reliant on a single employer or industry is vulnerable, so we prefer urban economies that include education, healthcare, public sector employment, and a mix of private enterprise.

3. Affordability and the Rent-Ownership GapWhen owning a home becomes significantly more expensive than renting, the result is a “forced renter” demographic that drives up rental demand. The rent-ownership gap gives us insight into how long tenants are likely to remain renters and how much pricing power exists.

4. Supply Constraints and Development BottlenecksHousing shortages, whether due to geography, regulation, or cost of development, strengthen the case for owning rental property. We favor cities where building is difficult, slow, or expensive because that protects our investments from oversupply risk.

5. Catalysts for Medium-Term ChangeInfrastructure projects, university expansions, new transit lines, government contracts, and institutional spending are indicators of transformation. These catalysts don’t just drive job growth, they often reshape how a city functions and grows.

Based on these criteria, let’s look more closely at three markets that currently meet our standards for mid-term upside.

1. Halifax, Nova ScotiaPopulation: 485,000  

Halifax has long been the economic and cultural capital of Atlantic Canada, but in recent years it has taken on a more strategic role in the national real estate landscape. Several converging forces make Halifax attractive from a mid-term investment standpoint. According to Statistics Canada, Halifax led all Canadian CMAs in interprovincial migration in 2023, adding over 10,000 new residents from other provinces. More than 50 percent of that inflow came from Ontario and British Columbia, as buyers and renters searched for more affordable housing and better quality of life.

Halifax’s housing prices remain significantly lower than in Canada’s major markets. As of Q2 2025, the average home price is $498,000, compared to $1.15 million in Toronto and $1.21 million in Vancouver. That affordability differential has pushed many would-be homeowners into long-term renting, especially as interest rates remain above 5 percent. Rental demand in Halifax is intense. CMHC reports a vacancy rate of 1.2 percent in 2024, with average two-bedroom rents up 9.7 percent year-over-year to $1,820 per month. Purpose-built rental construction has lagged behind demand, as developers face high material costs and a permitting system that can take up to 18 months for mid-rise multifamily approvals.

At the same time, Halifax’s economy is expanding in defense, shipping, higher education, and technology. The $25 billion Irving Shipbuilding contract has created over 4,000 jobs and underpinned growth in ancillary sectors. With Dalhousie University’s expansion and a rising international student population, despite the recent policy change, the long-term rental base continues to grow. For investors, this creates a strong case for defensive income and long-term value appreciation, particularly in mid-rise rentals and well-located infill developments.

2. London, OntarioPopulation: 545,000  

London is often considered due to its proximity to Toronto, but that would be an incomplete picture. While it does benefit from Toronto’s population and job growth, London economic picture is comparably strong. Between 2018 and 2023, London grew by nearly 70,000 residents, with net migration accelerating over the last two years. In 2023 alone, the city added over 15,000 new residents, driven by both interprovincial and international newcomers.

London’s housing market remains comparatively affordable. The average home price in mid-2025 is approximately $635,000, compared to $1.15 million in Toronto. The average rent for a two-bedroom apartment sits around $1,850, up 6.2 percent year-over-year. That affordability gap leaves many residents in the rental market for extended periods, particularly those with average household incomes below $90,000.

Western University and Fanshawe College enroll over 45,000 full-time students, and London Health Sciences Centre is one of Ontario’s largest employers. The result is a stable, education and healthcare driven economy that produces consistent rental demand, especially in areas near transit and campuses. Industrial and logistics growth has also been significant. Amazon’s distribution center added over 1,000 full-time jobs, while nearby manufacturing hubs continue to expand. The City of London is investing in infrastructure and downtown revitalization, including the $500 million Bus Rapid Transit network. Zoning reforms and an increasingly pro-growth municipal council have opened the door to missing middle housing and mid-rise infill development. For multifamily investors, London offers both cash flow and value-add opportunities in neighborhoods transitioning from single-family to higher density formats.

3. Kelowna, British ColumbiaPopulation: 155,000 (City), 227,000 (Metro)

Kelowna represents a different kind of opportunity, one rooted in lifestyle migration, tourism-driven growth, and constrained geography. Located in the Okanagan Valley, Kelowna is increasingly seen as a destination for young professionals, retirees, and investors who want a smaller city with big-city appeal. Between 2016 and 2023, Kelowna’s metro area grew by more than 60,000 people, a nearly 35 percent increase. In 2023 alone, it added approximately 8,000 new residents. A large portion of this growth has come from Vancouver and Calgary, with remote workers and retirees looking to exit high-cost urban centers.

Housing prices in Kelowna are steep for a mid-sized city, with an average home price of $842,000 as of Q2 2025. That pricing, combined with elevated borrowing costs, has kept many residents in the rental market longer. Average rent for a two-bedroom apartment now exceeds $2,200, with year-over-year rent growth of 7.9 percent.

Despite its growth, Kelowna is highly supply-constrained. Mountainous terrain, lakefronts, agricultural land protections, and strong neighborhood resistance to densification all limit new development. The city is surrounded by protected lands and water, making large-scale expansion nearly impossible without vertical development.

UBC Okanagan has plans to double its student population to over 20,000 within the next decade, while Kelowna General Hospital continues to expand services as the region’s primary healthcare hub. The city’s airport, now serving over 2 million passengers annually, adds further support for long-term economic growth.

For investors, Kelowna offers a scarcity premium. While cap rates may be compressed, the long-term appreciation and rent growth outlook remains strong due to insatiable demand and constrained supply. Purpose-built rentals in walkable, amenity-rich areas of the city stand to benefit most.

Targeting the Mid-Cycle Advantage

In Canada’s shifting economic landscape, smart real estate investment is no longer about finding the cheapest market or the one with the largest population. It’s about identifying the next wave, cities where fundamentals are lining up today to support strong performance over the next three to five years. Halifax, London, and Kelowna each offer something different. Halifax provides a combination of federal job stability, strong rental growth, and a clear affordability advantage. London delivers a mix of employment anchors, zoning evolution, and affordability for working-class families and students. Kelowna offers scarcity, lifestyle-driven migration, and a demographic profile that supports long-term value preservation.

Together, they represent a cross-section of the kinds of markets we target, mid-sized cities with strong fundamentals, hidden momentum, and barriers that protect the upside. While every market has risk, these three cities offer the kind of asymmetry that long-term investors seek—limited downside, measurable upside, and the kind of demographic and economic momentum that compounds returns year after year.

Sources:

·  Population estimates: Statistics Canada, Table 17-10-0135-01 (Population estimates, July 1, 2024, adjusted for regional growth trends)

·  Average home prices: Canadian Real Estate Association (CREA) Housing Market Stats, June 2025

·  Rent & vacancy data: CMHC Rental Market Report, Spring 2025 & Rentals.ca National Rent Report, July 2025