Canada's Housing Crisis: Progress Made but Challenges Remain, Expert Says

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Ian Lee of Carleton University discusses the ongoing housing affordability and supply crisis in Canada, emphasizing the need for more substantial reforms and the role of the private sector.

Canada has made notable strides in housing reform; however, the nation is still grappling with a significant housing affordability and supply crisis, as stated by Ian Lee, an associate professor at the Sprott School of Business at Carleton University. During his presentation at Housing Summit 6.0, organized by the Residential Construction Council of Ontario (RESCON), Lee posed a critical question: "Is housing reform working in Canada?" His response was a nuanced, qualified affirmation. "It is sort of working," he remarked, acknowledging the initial steps taken by governments to tackle pressing housing challenges. Nevertheless, he underscored that the reforms implemented thus far are inadequate to bridge the widening housing supply gap.
Lee provided data indicating that Canada is constructing homes at a rate that is considerably below what is necessary to meet demand. Current housing starts hover around a quarter of a million units annually. In stark contrast, the Canada Mortgage and Housing Corporation (CMHC) estimates that between 400,000 and 470,000 new homes are required each year to alleviate affordability issues and address the backlog of supply. "The numbers clearly show that we are not building enough," Lee asserted. "It is crystal clear that we are still falling behind."
This ongoing problem is exacerbated by years of rapid population growth, which has significantly outstripped new housing development. Although the federal government has reduced immigration targets and initiated measures to stabilize population growth, Lee pointed out that the imbalance created over the past decade will have long-lasting implications. Even with recent changes in immigration policy, he indicated that housing shortages are likely to persist for the foreseeable future. The cumulative supply gap has grown so large that years of consistent construction activity will be required to restore market equilibrium.
Lee emphasized the substantial economic value generated by the residential construction sector, arguing that policymakers must recognize its critical importance to Canada’s economy. In 2025, residential construction supported over 1.2 million jobs, yielded $90.1 billion in wages, and accounted for more than $213 billion in economic investment. New home construction specifically facilitated approximately 259,000 housing starts, supporting over 515,000 jobs, generating nearly $39 billion in wages, and creating close to $92 billion in investment activities. "Your industry is hugely important," he told attendees. "1.2 million jobs, $90 billion in wages, and more than $200 billion in investment."
Given the sector's economic impact, Lee argued that governments should focus on removing barriers that hinder the industry's ability to provide the necessary housing supply for Canadians. While numerous housing initiatives and incentive programs have been launched by various governments in recent years, Lee warned that public funding alone will not rectify Canada’s housing shortage. "Government programs are not going to solve housing shortages," he stated. He referenced initiatives aimed at encouraging rental construction and supporting housing development, noting that while some have helped boost rental activity, they contribute only modestly when viewed in light of the national housing deficit.
Lee characterized the effects of major federal housing initiatives as "barely moving the needle" in relation to the country’s overall requirements. He asserted that the solution lies within the private sector. A key focus of Lee's presentation was his critique of municipal development charges (DCs), which he identified as one of the primary contributors to housing affordability issues in Canada. "Our goal in our country should be zero development fees," he contended. "They are destructive and harmful and hurt our young people and new Canadians."
Municipalities argue that these charges are essential for funding infrastructure such as roads, sewers, and parks, but Lee emphasized that the costs are ultimately transferred to homebuyers. "They’re being passed on to individual homeowners and driving up the cost, making housing ever less affordable for young people," he explained. According to a CMHC study, DCs account for between eight and 16 percent of the cost of new condominiums in Ontario, while for single-detached homes in Toronto, DCs can represent roughly nine percent of the purchase price. In many Greater Toronto Area (GTA) municipalities, DCs on new homes can exceed $100,000, positioning them among the highest in the country.
Lee highlighted that eliminating DCs in Toronto could potentially lead to the construction of an additional 10,000 to 16,250 housing units annually. "Get rid of the development fees and we can substantially reduce the price of new housing," he stated. Beyond the issue of DCs, Lee urged municipalities to take further action to minimize lengthy approval processes and bureaucratic delays that inflate project costs and restrict housing production. "Large cities are not doing enough," he remarked. "They’ve got to reduce red-tape delays." He noted that jurisdictions with quicker approval times and lower regulatory burdens typically experience lower housing costs and more robust housing supply growth.

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