Home Buying

Ways the Housing Crisis in Canada Can Be Solved

Ways the Housing Crisis in Canada Can Be Solved
Written by
  • Tvine
| Sep 19, 2023
Reviewed, Oct 13, 2023
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    It’s no secret that Canada is experiencing a housing crisis. Between plummeting affordability, rising home prices, and the housing supply shortage, homeownership has become inaccessible to many potential buyers. With more and more would-be buyers losing hope in their homebuying plans, what can the Canadian government do to alleviate the housing crisis?

    In this article, we outline factors and the impact surrounding the Canadian housing crisis and offer a list of policy responses that could solve many of the issues the market is currently facing. 


    Key Highlights

    • Between new buyers entering the market and increasing immigration, Canada’s housing supply is not keeping pace with growing demand.
    • Federal and municipal governments need to implement new policies that streamline and incentivize new developments.
    • Both federal and local governments should consider policies prioritizing  new homebuyers who will live on the property they purchase over repeat buyers, multi-property owners, or investors. 

    Are you a first-time buyer?

    The Housing Crisis in Canada

    Many socioeconomic factors are driving the housing crisis in Canada. One of the main factors is the imbalance between housing supply and demand. Over the past decade, population growth has significantly increased, particularly in major cities. 

    However, the construction of new housing units has not kept pace with this population growth, leading to a shortage of available homes. Population growth continues to put upward pressure on home prices, making it increasingly difficult for many Canadians to afford a home.

    Increasing home prices and mortgage rates, by far outpacing household incomes, have also contributed to the decline in affordability. 

    As demand for housing continues to outstrip supply, home prices have skyrocketed in many parts of the country. The lack of housing supply has made it difficult for first-time homebuyers to enter the market and has put a strain on existing homeowners who may be looking to upgrade or downsize. 

    The high cost of housing has also contributed to rising levels of household debt, as Canadians are forced to take on larger mortgages to afford a home.

    Methods to Solving the Housing Crisis

    Here is a quick overview of some policy responses the federal government needs to consider to address housing affordability and inaccessibility in Canada. 

    1. Addressing the 1 Million Immigrants Arriving in 2024-2025

    Currently, annual immigration in Canada amounts to around 500,000 new immigrants – one of the highest rates per population of any country in the world.

    The surge of immigration to Canada, particularly the influx of international students, has been identified as one of the contributing factors to the escalating housing crisis in the country. 

    The number of international students choosing Canada for their studies has sharply increased in recent years. 

    While this contributes positively to the economy and cultural diversity, it also pressures the strained housing market. These students typically reside in major cities where educational institutions are located, intensifying these areas’ housing supply and demand imbalance. 

    Addressing this housing crisis requires comprehensive strategies focusing on increasing the supply of affordable homes and managing the demand side. 

    2. Incentivize the Mass Production of New Homes

    Building on the above point, the Canadian housing supply needs to catch up  with housing demand. 

    As the population grows and more people migrate to urban areas, the demand for housing continues to rise. However, the supply of affordable and available homes needs to catch  up with this demand, leading to skyrocketing prices. 

    To  address this crisis, it is crucial to incentivize the mass production of homes in Canada.

    One way to incentivize the mass production of homes is through tax incentives or subsidies for developers. 

    The government can encourage the construction of more homes by  offering tax breaks or financial support to developers who build a certain number of affordable housing units, t. This would increase the overall supply of housing but also ensure that some  of these homes are affordable for low-income individuals and families.

    Providing grants or low-interest loans to individuals or families who want to build their own homes can also contribute to mass production. 

    Low cost loans would increase the supply of homes and  encourage homeownership, which has several social and economic benefits. 

    Another approach is to streamline the planning and approval process for new housing developments, which we discuss later. 

    3. Addressing Senior Citizens and Home Availability

    Baby Boomers, many retired and whose adult children no longer live with them, still live in their detached family homes, reducing the availability of single-family homes for new buyers. 

    Incentivizing seniors to either sell their homes and move into different housing (condo) or renovate their homes to have multiple units would help free up more homes appropriate for new families. 

    4. Adjust Rules to Make the Housing Market Fairer

    Both federal and local governments should consider policies surrounding multi-property purchases and repeat homebuyers that raise taxes and limit profits to prioritize new homebuyers who will live on the property they purchase. 

    Data from Statistics Canada indicates that multi-property owners owned between 29% and 41% of the Canadian housing stock in 2019-2020, not to mention first-time home buyer share going down to 47% from 53%. Buyers who can afford to do so are investing their private money into the housing market to build or own more rental properties.

    5. Revise Local Zoning and Permitting Systems

    Charges and limitations associated with municipal zoning laws, permits, and regulations need to be loosened by local governments. For starters, these charges are usually very high in urban areas. They are often passed down to the consumer by the developers later by factoring into the housing units’ price. 

    Additionally, deadlines on permit approvals should be put in place to streamline and speed up the process. In general, municipalities should revise restrictive zoning laws, and  the high zoning costs for new housing constructions. 

    Are you a first-time buyer?

    What Potential Homeowners Should Look for in 2023 and 2024

    Despite homeownership getting harder and harder for new buyers, there are still other ways for buyers to navigate the housing crisis. 

    Widening their horizons in terms of location is one the best ways to do this, such as moving to the suburbs or a more affordable city. 

    Another great way to save money is to shop around for the best mortgage rates and products available to guarantee you end up with the most money-saving option.

    Lastly, reaching out to a mortgage expert or advisor for advice on starting your homebuying journey is the quickest and easiest way to get your hands on all the right information and best tips for your home purchase.

    Find a better rate, and we’ll match it, beat it, or give you $500*.

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    Frequently Asked Questions

    Welcome to our Frequently-Asked Questions (FAQ) section, where we answer the most popular questions designed and crafted by our in-house mortgage experts to help you make informed mortgage financing decisions.

    Is there a housing crisis in Canada?

    Yes. Between plummeting incomes and affordability with respect to inflationary pressures, rising home prices, and the housing supply shortage, homeownership has become inaccessible and elusive to many potential young people and families.

    What are the main causes of a housing crisis?

    There are many socioeconomic factors driving the housing crisis in Canada. One of the main factors is the imbalance between housing supply and demand, where Canada’s inventory of available homes is being outpaced by demand from potential buyers.

    What is the government doing about the housing crisis in Canada?

    Many government parties are running on platforms with the housing crisis at the forefront of the issues they are tackling. However, the policies proposed so far have yet to be considered sufficient by experts.

    Are you a first-time buyer?

    Final Thoughts

    As homeownership becomes more and more inaccessible to Canadians, it is crucial that both federal and provincial governments implement policies that directly target the impact of the housing crisis. Policy responses that address  affordability, rising prices, rising rates, and the decreasing housing supply in Canada will solve the issues of the current market and alleviate the financial strain it’s caused potential buyers. 


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