Solutions to Canada’s housing crisis: practical pathways for a resilient market Solutions to Canada’s housing crisis: practical pathways for a resilient market

Overview

Canada’s housing market is facing a critical juncture, with persistent affordability challenges, supply shortages, and regulatory complexity contributing to a suboptimal and inequitable system.  In collaboration with the Ivey Business School Alumni Toronto Chapter, Osler recently convened a panel discussion comprising industry and political leaders to examine the root causes of the crisis and to propose actionable solutions. 

This article synthesizes the key insights and recommendations from the discussion, with a focus on fostering collaboration among government, developers, lenders and property owners to create a more efficient and inclusive housing ecosystem.

Context and key data

Despite the scale of the problem, the housing market is operating as designed, with supply constraints, escalating development charges, regulatory uncertainty, and a growing disparity between incomes and housing costs. These factors have contributed to a market that is increasingly inaccessible for many Canadians.

The scale of the challenge is significant:

• An estimated 3.5 million new housing units are required nationally within the next five years, with 1.5 million needed in Ontario alone.
• Investor ownership is substantial, with 20–30% of housing stock held by investors.  In Ontario, 42% of condominiums are investor-owned, compared to 15% of single-family homes. In Toronto, approximately 50% of condominiums are investor-owned.

Government roles and responsibilities

Federal: The federal government’s involvement is generally limited to providing funding through a variety of programs, including the Housing Accelerator Fund. The National Housing Strategy Act (2019) introduced a human rights-based approach. The Canada Mortgage and Housing Corporation (CMHC) implements the federal National Housing Strategy and Plan and provides mortgage loan insurance and supports both renters and homeowners through various tax incentives and programs.

Provincial: Provinces, particularly Ontario, play a central role in shaping housing policy and legislative frameworks. The Provincial Planning Statement guides land use planning, while the Ontario Planning Act sets out the roles and responsibilities of municipalities, including zoning, density, and building regulations.

Municipal: Municipalities are responsible for executing provincial policy through official plans, zoning by-laws, and planning approvals. They are on the front line of optimizing land use and accelerating the supply of affordable housing.

Housing as an economic driver

Housing is a fundamental driver of economic activity, influencing employment, consumer spending, and broader economic stability.  Prolonged affordability challenges risk exacerbating social and economic disparities. Policymakers are encouraged to adopt a balanced approach that supports development while safeguarding community interests and sustainability objectives.

Five solutions to the housing crisis

The panel discussed a range of possible approaches to address the current housing crisis, including:

1. Legislating housing as an essential service — akin to public safety or critical infrastructure — could provide the policy certainty and stability required for long-term investment and planning. This would help insulate housing policy from electoral cycles and foster consistent collaboration among all stakeholders.
2. Grant fee simple title to First Nations reserve land: The current legal framework restricts economic participation for many First Nations by preventing fee simple ownership of reserve land. Fee simple title is the most complete form of property ownership in Canada, granting the owner full rights to use, sell, lease, or develop the land, subject only to zoning laws and other legal restrictions. Extending full and unconditional fee simple title to reserve lands would unlock significant economic opportunities, support infrastructure development, and advance economic reconciliation by providing First Nations with the same property rights and economic tools available to other landowners in Canada.
3. Financial innovation through fractional co-ownership for first-time buyers: The binary nature of Canada’s housing market — renting or owning — excludes many aspiring homeowners. Fractional co-ownership models would allow individuals to acquire equity in a property incrementally, lowering the barriers to entry and providing new disposition strategies for investor-owned inventory. This approach would require regulatory and financial innovation, including new mortgage products and recognition of fractional ownership in credit assessments.
4. Review development charges and consider tax increment financing development charges: (DCs) have increased dramatically, creating a barrier to new housing supply. Alternatively, Tax Increment Financing (TIF) is a funding mechanism that allows municipalities to finance infrastructure projects by capturing the future increase in property tax revenues generated by a redevelopment project. Under TIF, the baseline property tax revenue from a designated area is frozen, and any incremental tax revenue resulting from the increased property value due to redevelopment is directed toward funding infrastructure improvements or other public projects. This approach avoids imposing upfront costs on new developments. TIF has been successfully used to finance transit infrastructure in Toronto and could be expanded to support housing development.
5. Facilitating multi-residential densification through regulatory change: The Office of the Superintendent of Financial Institutions, Canada’s prudential regulator and supervisor, currently defines residential real estate as capped at a four-plex under one title. Any residential dwelling of five units or greater qualifies as commercial real estate, incurring a higher cost of capital, whether for developers, lenders or mortgagors. Amending this definition to include up to eight units would support gentle densification, multigenerational living, and the creation of new financing products, thereby increasing supply in established neighbourhoods.

Additional considerations

Other strategies under discussion include converting office towers to mixed-use developments, accelerating sustainable building practices through prefabrication and eco-friendly materials, and introducing a sliding scale mortgage interest tax deduction based on household income.

Conclusion

Addressing Canada’s housing crisis requires urgent, coordinated action across all levels of government and the private sector. The solutions outlined above are intended to catalyse meaningful change, promote affordability and ensure the long-term resilience of Canada’s housing market. By embracing innovation and collaboration, stakeholders can help deliver a more inclusive and sustainable housing ecosystem for all Canadians.

Developed with contributions from Sharon Castelino, Ivey Business School Alumni Toronto Chapter, Chris Barnett, partner, Osler’s Municipal, Land Use Planning and Development Group, and Stephen Poloz, Special Advisor to Osler.

The views, opinions, and information expressed herein are provided for general informational purposes only and do not necessarily reflect the views, positions, or opinions of Osler or any individual associated with the firm. They are not intended to constitute legal, business, or other professional advice, nor should they be attributed to any specific person or entity.