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The vast majority of new purpose-built rental housing in Canada relies on CMHC-insured loans to make them financially feasible. In 2024, CMHC estimated that their construction financing programs backed an estimated 88% of new rental starts across the country.
But anyone in the industry will tell you that the terms in which these loans are made available to developers are constantly changing. And I think it's pretty clear that many of the changes being made are intended to push, maybe force, developers into building some percentage of affordable homes as part of their projects.
At the political narrative level, this makes sense: Canada needs more affordable housing. But it's important to remember that homes pegged to below-market rents are not financially feasible to build on their own. So, unless equivalent subsidies are being somehow provided, the remaining market-rate homes will be forced to shoulder the additional costs.
We talk about this a lot on the blog (see inclusionary zoning posts), and I don't see it as an equitable solution. But there's also the problem of it further choking off new housing supply. And my sense is that that's exactly what is happening. It's only getting harder to underwrite new rental housing — certainly in cities like Toronto.
This will have the opposite effect on overall affordability. It also increases the probability that my supply predictions will prove roughly correct. I can't see a world where new rental supply is able to step up and fill the gap being left by new condominiums, a large portion of which was serving as new rental housing.
Toronto is on a path toward a severe housing shortage, and it's very hard for the private sector to do much about it in the current market environment. When that will change remains to be seen.
Cover photo by Darren Richardson on Unsplash
This is an important chart taken from this recent article by Steve Lafleur talking about the need for Canada to "bulk up." What it obviously shows is that housing completions and population growth have generally been diverging in Canada since the 1970s.
One of the things I included in my list of "how to improve the feasibility of infill housing" was the adoption of single-stair buildings. So today I'm happy to share that next week the Canadian Urban Institute — in collaboration with LGA Architectural Partners — will be hosting a series of online micro-conferences covering this topic. If you're a regular reader of this blog, you'll know that LGA is one of the leading voices, if not the leading voice, advocating for this important building code change.
Here are the event posters:
The vast majority of new purpose-built rental housing in Canada relies on CMHC-insured loans to make them financially feasible. In 2024, CMHC estimated that their construction financing programs backed an estimated 88% of new rental starts across the country.
But anyone in the industry will tell you that the terms in which these loans are made available to developers are constantly changing. And I think it's pretty clear that many of the changes being made are intended to push, maybe force, developers into building some percentage of affordable homes as part of their projects.
At the political narrative level, this makes sense: Canada needs more affordable housing. But it's important to remember that homes pegged to below-market rents are not financially feasible to build on their own. So, unless equivalent subsidies are being somehow provided, the remaining market-rate homes will be forced to shoulder the additional costs.
We talk about this a lot on the blog (see inclusionary zoning posts), and I don't see it as an equitable solution. But there's also the problem of it further choking off new housing supply. And my sense is that that's exactly what is happening. It's only getting harder to underwrite new rental housing — certainly in cities like Toronto.
This will have the opposite effect on overall affordability. It also increases the probability that my supply predictions will prove roughly correct. I can't see a world where new rental supply is able to step up and fill the gap being left by new condominiums, a large portion of which was serving as new rental housing.
Toronto is on a path toward a severe housing shortage, and it's very hard for the private sector to do much about it in the current market environment. When that will change remains to be seen.
Cover photo by Darren Richardson on Unsplash
This is an important chart taken from this recent article by Steve Lafleur talking about the need for Canada to "bulk up." What it obviously shows is that housing completions and population growth have generally been diverging in Canada since the 1970s.
One of the things I included in my list of "how to improve the feasibility of infill housing" was the adoption of single-stair buildings. So today I'm happy to share that next week the Canadian Urban Institute — in collaboration with LGA Architectural Partners — will be hosting a series of online micro-conferences covering this topic. If you're a regular reader of this blog, you'll know that LGA is one of the leading voices, if not the leading voice, advocating for this important building code change.
Here are the event posters:
Back then, we were building about 200,000 homes a year and, today, we're building slightly under that. Of course, our population has also grown dramatically during this time period, as has the number of people who move to Canada each year. The result is that the Canada Mortgage Housing Corporation estimates that we'll have a housing shortage of approximately 3.5 million homes by 2030.
But we already knew this. Big numbers are often thrown around in studies. I think the more important question is: How do we reconcile this massive shortage with the fact that, in cities like Toronto, we have lots of zoned land ready for the construction of new housing (but that isn't financially feasible) and lots of unsold homes that aren't selling right now?
Do we really have a shortage?
Well, Toronto is just one specific market, and I can't speak to all the dynamics playing out across the country and the world. But it strikes me that what's missing from the above chart, and this discussion in general, are considerations around (1) housing type and (2) affordability. And by type, I'm largely thinking about size, as it's closely linked to affordability.
If what we're building is too expensive for most people and unsuitable for their household needs, then yes, I guess that would mean we have a shortage of housing.
And here are the links if you'd like to register for any of the sessions:
Single Stair Sessions Day 1 — "The 3 Ps: Pilot Projects and Prototypes"
Single Stair Sessions Day 2 — "The 2 Ss: Safety and Sustainability"
CityTalk | Live — "Addressing Canada's Housing Supply: Can Regulations Drive Housing Innovation?"
We are actively underwriting new missing middle housing across central Toronto. And I can tell you that project feasibility would benefit enormously from this code change. Single-stair buildings are also allowed in many/most other parts of the world, and so we already know that it can make for better homes and that it doesn't need to compromise life safety. It's great that the city-building community is now increasingly focused on this opportunity.
Cover photo by Mika Wegelius on Unsplash
Back then, we were building about 200,000 homes a year and, today, we're building slightly under that. Of course, our population has also grown dramatically during this time period, as has the number of people who move to Canada each year. The result is that the Canada Mortgage Housing Corporation estimates that we'll have a housing shortage of approximately 3.5 million homes by 2030.
But we already knew this. Big numbers are often thrown around in studies. I think the more important question is: How do we reconcile this massive shortage with the fact that, in cities like Toronto, we have lots of zoned land ready for the construction of new housing (but that isn't financially feasible) and lots of unsold homes that aren't selling right now?
Do we really have a shortage?
Well, Toronto is just one specific market, and I can't speak to all the dynamics playing out across the country and the world. But it strikes me that what's missing from the above chart, and this discussion in general, are considerations around (1) housing type and (2) affordability. And by type, I'm largely thinking about size, as it's closely linked to affordability.
If what we're building is too expensive for most people and unsuitable for their household needs, then yes, I guess that would mean we have a shortage of housing.
And here are the links if you'd like to register for any of the sessions:
Single Stair Sessions Day 1 — "The 3 Ps: Pilot Projects and Prototypes"
Single Stair Sessions Day 2 — "The 2 Ss: Safety and Sustainability"
CityTalk | Live — "Addressing Canada's Housing Supply: Can Regulations Drive Housing Innovation?"
We are actively underwriting new missing middle housing across central Toronto. And I can tell you that project feasibility would benefit enormously from this code change. Single-stair buildings are also allowed in many/most other parts of the world, and so we already know that it can make for better homes and that it doesn't need to compromise life safety. It's great that the city-building community is now increasingly focused on this opportunity.
Cover photo by Mika Wegelius on Unsplash
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