Canadian housing is expensive. It is expensive to produce, and in turn it is expensive to buy. The problem is no longer merely one of affordability: it has become an economic-capacity and nation-building challenge. Canada’s next housing system needs to be more supply-elastic, more tenure-diverse, and more production-oriented.
As a developer who spent the first half of my career in Britain (London) and the second half in Canada (Toronto and Alberta), I am prone to comparing and contrasting market cycles and functioning. I arrived in Toronto in 2010, escaping a London that was still feeling the effects of the late 2000s boom and subsequent bust following the Great Financial Crisis (GFC). Compared to the scorched London market, Toronto had briefly stalled and then quickly started growing again. Veterans spoke to me about the slump of the 1990s, but the fact that the Canadian market was much earlier in the cycle than the US or UK explained its resilience to the GFC.
I was immediately struck by how relentlessly bullish Canadian / Toronto housing culture was. Attending my first condo sales launch in Regent Park, Toronto, a 280-unit condo tower had lines around the block and materially sold out in a single weekend. This contrasted markedly with the London market at the time, where I was still dealing with an inventory of unsold/rescinded flat sales and moving them into vehicles that became the seed of the purpose-built rental (“PBR”) sector which has taken off since.
Moving forward to the condo peak in 2022, for over two decades, the house price chart pointed up and to the right. The market expectations got baked in and the government saw a golden goose. All housing and development markets are regulated, and it is thus a question of degree. The critical point to understand here is that markets that are most free to respond to changing conditions will function better.
Canadian housing is certainly not a uniform market. In contrast to Toronto and Vancouver, Alberta’s condo market slowed in 2015, and despite a few periods of activity, it hasn’t seen the sustained growth of the Canadian gateway cities in the decade since. Urban high-density new supply in Edmonton and Calgary has been dominated by purpose-built rental for well over a decade.
Once again, the UK and US markets lead the Canadian market in terms of peak owner-occupation of homes. By some measures, the UK peaked at 71 percent in 2008, and the US at 69.2 percent before the GFC. Canada peaked at 69 percent in 2011 and was 66.5 percent in 2021 (StatsCan). The prior growth was part of the post-World War II credit expansion, in an era of growth and rising living standards. The question we face now is whether the ownership level stabilizes around a new equilibrium or begins a new trend upward or downward.
I. Scarcity in a Land-Rich Country
The next factor to examine is geography: Canada is a huge country with only a small number of major housing markets. The country is super-endowed with land, but demand is overwhelmingly concentrated into relatively few metropolitan markets, and particularly three gateway cities: Toronto, Vancouver, Montreal, where growth and investment concentrate. These are followed by Calgary, Edmonton, Ottawa, and a few smaller cities. Immigration and high-value employment flows into those markets. On the other hand, the US has several gateway cities and dozens of investable employment centres, such as Dallas, Houston, Nashville, Tampa, Denver, Seattle, Boston, etc. The OECD specifically notes that Canada’s apparent abundance of land is misleading because economic activity and population are very skewed geographically.
When one compares construction costs with North American benchmarks, the data suggest that Canada’s high prices are not specifically caused by construction rates. Turner Townsend reports Canada ~US$300/ft² vs US ~US$420/ft², then New York ~US$534/ft² vs Toronto being materially below that. If physical construction rates aren’t particularly extreme, where does the final housing price come from?
The next question to ask is: how well does supply respond to demand? There are marked differences in supply elasticity between different Canadian cities, and with US counterparts. The OECD Economic Survey of Canada 2021 states Canada’s estimated long-run housing supply elasticity varies substantially, “from less than 0.5 in Toronto and Vancouver to about 2.0 in Edmonton,” citing CMHC data from 2018. Estimates vary by methodology: a separate Bank of Canada study produced the following results:
The supply inelasticity of Toronto or Vancouver will come as no surprise to anyone investing or working in those markets—whether arising from a combination of municipal land use policy, rezoning or permit approval times, complexity and scale of projects, or the tight supply of sites with fit-for-purpose land use. On the other hand, the prairie cities are less constrained geographically and tend to have more permissive regulation on new supply. Edmonton demonstrates what a relatively elastic housing system looks like in practice. Similarly, a demand shock in many less constrained US growth markets simply drives another subdivision fifteen to twenty-five kilometres farther out.
II. When the Marginal Home Carries the City
One of the largest variables is related to policy choices in regulatory control and municipal funding decisions. “Development pays for growth” is a common funding strategy in many cities around the world. For example, in London, the “s106” policy delivered high volumes of affordable and social housing in return for planning permission uplifts. When the private sector was building, the policy delivered relatively efficient grant-supported affordable housing. When the market slowed, the affordable housing supply dried up. However, the strategies taken by different Canadian cities show large variance in the reliance on Development Charges (DCs) and other municipal fees used to fund infrastructure.
According to a 2024 study by CHBA/Altus, there is high divergence across the country from $8,700 to $195,300 per unit (low-rise) and $1,600 to $134,400 per unit (high-rise). That immediately illustrates how much of the cost burden can be policy-created and geographically concentrated, rather than a simple national construction-cost issue.
Furthermore, the CHBA says municipal fees have risen by an average of about $27,500 per low-rise unit since 2022, and DCs nationally have increased roughly 700 percent over twenty-five years (CHBA). For municipalities managing increasing city budgets during periods of growth, one can understand the attraction.
Land use and city planning policy, targeting higher-density build forms and rising performance standards, also drove costs. I have developed tens of thousands of high-quality homes, responsibly deploying ESG-mandated capital in LEED / BREEAM accredited buildings and communities. In the Canadian context, there is a real opportunity cost to layering locally divergent performance requirements beyond nationally or provincially established building codes during a housing-supply emergency.
In a cycle that became self-reinforcing, higher builder costs met rising prices each year, and the result was smaller units in taller towers. The dynamic satisfied investor demand for as long as prices rose, but rental yield and end-user satisfaction became secondary or tertiary factors in the investment evaluation.
As long as the music kept playing, municipalities could meet significant capital liabilities through development charges and levies, but once the market stalled, their fiscal dependency on the new marginal unit became painfully apparent. Note that in 2026, various levels of government have been incentivizing development through DC relief, including the welcome Ontario DC Reduction Program with 30-50 percent or more relief from charges (40-60 percent in Toronto). While this is undoubtedly a positive direction, the reductions largely unwind a substantial portion of the increase in development charges since the late 2010s. Such measures take time to draft and enact and still leave the charges at levels shaped by the tail end of a two-decade-long cycle.
Prices rising for twenty years conditioned a generation of buyers and investors. To borrow a phrase from the Bitcoin maximalists, “number go up” drove preconstruction investors, providing bridge capital and anchoring construction finance. Preconstruction investors were an essential part of the capital stack; all this means that one of the primary mechanisms by which Toronto produced high-density ownership housing has broken.
When one considers major US markets, it is noticeable how few had similarly consistent active high-density condo markets in the years since the GFC. Manhattan and Miami are perhaps the closest analogues to Vancouver or Toronto.
III. A New Equilibrium?
Taking a moment to assess the market requires a clear understanding of where we are, where current trends are leading, and what course corrections may be needed. Given housing’s enormous direct contribution to the national economy, as well as its wider multiplier effects, it must occupy a central place in any serious strategy for rebuilding the productive foundations of Canada’s housing market.
Using Statistics Canada data, we can see that between mid-2021 and spring 2026, Canada's population grew by more than three million people, an increase of over 8 percent. Over roughly the same five years, the country started about 1.28 million homes, averaging around 256,000 annually. CMHC now estimates that restoring housing affordability merely to its 2019 level would require between 430,000 and 480,000 starts every year for a decade—almost twice the capacity our housing system has recently demonstrated. Even with short-term declines in net immigration this year, more homes are needed before the century-long trend of growth resumes.
But the shortage is not uniform. Despite sharing the same federal immigration system, currency and nationwide construction industry trends, Alberta displays some interesting divergences. Alberta's population grew almost 14 percent over the same period, substantially faster than Ontario or British Columbia, yet its housing industry responded. In 2025, Alberta's urban centres started more than fifty-three thousand homes, approaching Ontario's sixty-three thousand despite having less than one-third of its population. CMHC now estimates that Edmonton's expected rate of construction is already sufficient to maintain market affordability. In other words, the effect of the high supply elasticity in Edmonton contributes to the comparative affordability in its market.
As a developer who has built in multiple markets, through various cycles, I understand how market conditions greatly influence the scale of projects, the built form, and the length of acceptable investment horizons. In my experience, leading large high-density projects during a market downturn is fraught and can feel like trying to steer a large container ship through a narrow channel in choppy waters.
Fundamentals matter once again. Price-to-income ratios, rental yields, household utility, and monthly carrying costs are reasserting themselves as meaningful constraints on valuation. For years, Toronto’s condo machine evolved around optimizing the investable unit rather than the livability of the long-term home. As expectations of perpetual appreciation recede, the economics of occupancy return to the foreground. Pro formas will remain tight, but one constructive consequence is a closer alignment between what gets built and the needs of the eventual end user—producing more homes that people actually want to live in.
The GTA has a lot of sitting and completing inventory to clear, and I expect prices will bottom out in the next year or two. Perhaps the starter pistol for the next cycle is fired by a smaller condo building meeting pre-construction sales thresholds, and momentum starts building again from there. However, for that to happen, interest rates will need to be low, and in my opinion, memories will need to be short.
As Prime Minister Carney recently said about the global order, nostalgia is not a strategy. Toronto is currently producing housing at an annual pace of roughly twenty-five- to twenty-six thousand starts, with PBR now comprising the much larger share of apartment starts. Capital will migrate toward housing types with shorter duration, lower capital lock-up, clearer end-user demand, and less dependence on appreciation. This means fewer concrete high-rises, fewer condos, more PBR (a particular focus of mine) and low- and mid-rise apartments and ground-oriented product. Outside the urban cores, household formation will always drive a baseline demand for suburban homes.
If the next Canadian housing cycle produces substantially more PBR and less ownership housing, are we consciously choosing that tenure outcome or merely accepting it because that's what current financing and policy can get built? In my experience working at the community scale, mixed-tenure neighbourhoods tend to be more sustainable over the long term.
Facilitating a well-functioning home ownership market in the cores as well as suburbs would be a big positive for the Canadian economy and individual families. If we look to other markets, we find incentives to home ownership, including the UK’s Shared Ownership model which helps first-time buyers acquire a partial stake in their home (10-75 percent) and pay rent on the balance. Measures such as shared ownership can play an important economic role by helping households gain a foothold in otherwise unaffordable markets, while supporting long-term housing stability and the gradual formation of family wealth.
Market housing will find a new equilibrium. I expect projects to trend smaller and with lower capital lock-up. The trend for rental housing to grow will continue, particularly in urban districts.
My greatest concern is with markets that are slow to react to new realities. Whether the inertia is due to regulation, taxation/development charges, or inflexible built forms (particularly at more extreme densities), the ability of developers and government to react more swiftly to market conditions will be central to restoring well-functioning markets.
Housing markets contain planning constraints, externalities, information problems and state-created costs, so simplistic free-market prescriptions are inadequate on their own to deliver best results. Urban housing markets are very far from being technically “efficient,” and we have looked at some of the reasons why in this essay.
PBR will continue taking a larger slice of the Canadian housing pie over the next five years. In addition to market housing, facilitating public-private partnerships to deliver efficient affordable housing, seniors’ housing, and long-term care must be a strategic goal of Canada’s nation-(re)building effort.
Canada cannot recreate the 2000–2022 housing model, and in the near term, it would be folly to try. The next system needs to produce far more housing, respond faster to demand, impose fewer costs on the marginal unit, permit different built forms, and retain pathways into ownership while dramatically expanding rental. The federal government’s renewed commitment to affordable housing is welcome and will be most effectively achieved in partnership with the private sector. Build Canada Homes has an important mandate to help transform the Canadian housing industry. Housing production then becomes not merely an affordability program but productive national infrastructure.
Thomas A. Burr is an urban development executive with experience leading major investment, development and construction projects in Canada and the United Kingdom.
Photo by Ali Soheil / Pexels.