The term "missing middle" is typically used to refer to a missing scale in our built environment. It is that middle scale of housing between low-rise and high-rise. But there's another way to think about it and that is in terms of the market that the housing is serving.

Over the last cycle, cities like Toronto saw a kind of "barbell" dynamic. Meaning, new supply tended to target the poles. It was delivering for young professionals and young couples on one end and for downsizers and wealthy retirees on the other. But what has been missing is new supply that targets the belly of the market. And by this I mean something like low-amenity, well-designed, mid-market homes.

Of course, there are good reasons for why this is the case. The cost structure of new developments makes it so that the only feasible way to underwrite new projects is to maximize rents through smaller suite sizes and copious amounts of amenities. It is not that developers don't want to do it any other way, it's that they generally can't.

This is the paradox underpinning Canada's housing crisis. Yes rents are softening and vacancies are rising right now, but it would still be right to say that we are in a crisis. And that's because it largely exists in a different segment of the market — the biggest one.

In my view, this is our great challenge and opportunity as we move through this downturn. And I would bet that once we unlock the right model(s), we will see just how pent-up the demand for housing is in cities like Toronto and Vancouver.

The term "missing middle" is typically used to refer to a missing scale in our built environment. It is that middle scale of housing between low-rise and high-rise. But there's another way to think about it and that is in terms of the market that the housing is serving.

Over the last cycle, cities like Toronto saw a kind of "barbell" dynamic. Meaning, new supply tended to target the poles. It was delivering for young professionals and young couples on one end and for downsizers and wealthy retirees on the other. But what has been missing is new supply that targets the belly of the market. And by this I mean something like low-amenity, well-designed, mid-market homes.

Of course, there are good reasons for why this is the case. The cost structure of new developments makes it so that the only feasible way to underwrite new projects is to maximize rents through smaller suite sizes and copious amounts of amenities. It is not that developers don't want to do it any other way, it's that they generally can't.

This is the paradox underpinning Canada's housing crisis. Yes rents are softening and vacancies are rising right now, but it would still be right to say that we are in a crisis. And that's because it largely exists in a different segment of the market — the biggest one.

In my view, this is our great challenge and opportunity as we move through this downturn. And I would bet that once we unlock the right model(s), we will see just how pent-up the demand for housing is in cities like Toronto and Vancouver.