Municipal regulations, zoning laws, and bureaucratic delays are exacerbating Canada’s housing affordability crisis
By Michel Kelly-Gagnon
and Gabriel Giguère
The housing market, like any market, is governed by the laws of supply and demand.
When demand increases faster than supply, prices go up; when supply increases faster than demand, prices come down.
The type of housing, or who builds it—whether a private developer, a non-profit or the government—is secondary. At its core, housing affordability is a numbers game.
The Canada Mortgage and Housing Corp. agrees. According to its most recent estimates, the country would need some 5.1 million more housing units to return to the level of affordability seen in 2004.
 Michel Kelly-Gagnon |
 Gabriel Giguère |
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Targets vary by province, of course. It’s easy to see that British Columbia and Ontario—compared to Manitoba or Newfoundland and Labrador—need to build a lot more to contain rapidly rising rents in cities like Toronto and Vancouver.
Alberta alone would need to build an estimated 410,000 housing units by 2030 to get there. At the current rate, some 280,000 will be built. While that’s not as bad as some other provinces, it remains far off the mark.
Still, each additional unit that goes up gets us closer to the goal. And that’s true regardless of the price level or the type of housing.
When a family moves into a new home—be it a house or a condo—it vacates another housing unit, generally a less expensive one than the place they’re moving into. This unit will, in turn, be occupied by another family, which will leave its former home vacant, and so on.
This process is called a migration chain or moving chain, and research has shown its real-world impact. A study by University of Notre Dame economist Evan Mast in 2023 tracked how new housing affects affordability.
Mast looked at 52,000 residents of new buildings, retracing the housing they occupied beforehand, identifying the current occupants of those units, retracing their former housing, and so on for six rounds of moving.
He found that for every 100 new housing units built, 45 to 70 affordable units became available in below-median income neighbourhoods. Of these, 17 to 40 units were freed up at price levels affordable for the lowest 20 per cent of households.
Mast is not the only one to have made such observations.
A team of Finnish researchers examined the case of Helsinki and found that for every 100 new housing units built, this moving chain made 31 units available at price levels affordable for the least fortunate 20 per cent of households.
While the moving chain’s positive effects have been demonstrated, these are not felt overnight. It generally takes about three years for this series of moves to produce most of its effects.
That said, the advantage of this method is that it allows for sustainable affordability—so long as cities do not prevent the mechanism from operating by blocking new construction.
Building new housing units, even expensive ones, has positive effects for society as a whole.
Instead of getting bogged down in increasingly complex regulations for developers and costly government-built housing projects, municipalities need to change tack. They must simplify and accelerate the issuance of permits, reduce zoning complexity and abolish unnecessary taxes on new housing construction that only drive up prices.
By reducing these bureaucratic burdens, our cities would be doing what’s needed to build the affordable housing of tomorrow.
If cities fail to act, younger generations will see homeownership move from a dream to an impossibility. The time for action is now.
Michel Kelly-Gagnon is the founding president and Gabriel Giguère a senior public policy analyst at the Montreal Economic Institute, an independent think tank with offices in Montreal, Calgary, and Ottawa.
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