Canadians Seeking Diverse Housing Options

Will a diverse housing supply cure the ailments of the Canadian real estate market?

Over the last couple of years, market analysts and public policymakers have taken another look at the state of the nation’s housing sector. While some parts of the country enjoy diverse housing inventories, many places do not offer buyers and renters the same variety of home options. It can be an either/or situation: glass condominiums or million-dollar detached single-family homes.

Industry observers will typically allude to the Toronto real estate market as a prime example of this.

In North America’s fourth-largest city, housing stocks are either glass condos or detached houses. Critics say this is the result of zoning, development red tape, and overregulation by municipal officials. As a result, there is a housing shortage at a time when the population is forecast to increase, which leads to higher prices for both residential properties to purchase and rental units. In the past year, there has been an initiative, especially at the provincial level, to resolve this issue.

This is a problem that homebuyers in the financial capital of Canada will have to deal with or find another city to live in with more options.

The good news is that plenty of new residential housing developments across the country are popping up and filling this diversity gap. But what does this consist of exactly?

The Missing Middle in Canada

When there is a desperate need for new housing, addressing the so-called missing middle could be the solution for affordability and fresh supply, something industry experts have been clamouring for since the beginning of the coronavirus pandemic.

It turns out that more Canadians are optimistic about these trends, too.

According to the RE/MAX 2023 Canadian Real Estate Industry Trends Report, 20 percent of homebuyers and sellers support new building developments that address the so-called missing middle gap.

The missing middle is a blend of multi-family or clustering residential types that match the scale of single-family and transition neighbourhoods. This is something that has been sorely missing in both major urban centres and suburban areas, which is why industry reports typically find the same level of consternation surrounding this issue.

For example, in the Halifax real estate market, homebuyers agreed that red tape, whether at the provincial or municipal level, exacerbates the missing middle housing.

“While there’s trepidation in the market right now, there are still pockets of affordability available in Halifax and throughout the province,” said Ryan Hartlen, a broker at RE/MAX Nova, in a statement. “For homebuyers and sellers alike, I advise them to seek out the right professionals to help them navigate all their options. This is especially critical while we wait on longer-term, more sustainable solutions that will support improving inventory levels and, ultimately, affordability, not only in Halifax but across the country.”

Considering that the nation will have an estimated 1.45 million new residents in the next two years, coming up with solutions by identifying the missing middle will be paramount. In addition, with many of the newcomers inevitably arriving in Toronto or Vancouver, policymakers will need to address mid-rise and medium-density homes, experts say.

Perhaps the answer rests in Victoria, where the city council voted in February to pass the Missing Middle Housing Initiative (MMHI), a program involving housing rezoning policies that will incentivize more construction of these facilities. But the campaign does much more than that; it constructs a bridge between dense apartment blocks and detached single-family homes.

While Mayor Marianne Alto concedes that this will not eliminate the issue, the MMHI facilitates and encourages more supply.

“Missing middle, to be quite frank, is not going to be at all the be-all and end-all of the solution to a lack of affordable units,” Alto told Jason D’Souza, host of CBC’s All Points West, last month. “There are so many other ways we have yet to consider and we’ll continue to consider.”

That said, the RE/MAX study found that homebuyers and renters believe there are other components to addressing the fundamental challenges behind the Canadian real estate market. This includes the restrictions relating to the mortgage stress test, the lack of technology in real estate transactions, and abysmal investments in public transportation.

In other words, it is a multi-faceted solution that will demand the cooperation of all three levels of government. Can public policymakers devise the right solutions to problems plaguing Canadians? It might depend not only on governments but the people as well.