In the 1980s, a new genre of interactive children’s books “where you are the hero” became popular. A book on Canada’s housing crisis might well be titled “a story where you are the villain.” It is rare that the right and the left collude to produce analogous – bad – results. Yet that is in part the story of Canada’s housing crisis. The villains come in many shapes: selfish homeowners, progressive urban planners, community activists, populist mayors and average citizens asking for a nice home and neighbourhood.

At the root of the crisis, in the simplest terms, is a dearth of housing, private and public. The gap between demand and what is being built has widened and will, in all likelihood, continue to widen. Each year, the Canada Mortgage and Housing Corporation updates its estimates of new housing units required if the gap, now a veritable canyon, is to be closed.¹ Citing a recent OECD study, the Economist suggests that Canada’s housing gap is currently the most acute among industrialized nations.²

Growing demand, with immigration largely to blame, is exacerbating the shortfall. But why does supply not follow? Leaving aside publicly funded housing, which accounts for only a fraction of supply and responds to different imperatives,³ why are developers not rushing to put new housing on the market? After all, for any other good, be it smartphones or breakfast cereals, supply rapidly adjusts to rising demand and prices. Why not housing? And why, seemingly, even less so in Canada than elsewhere?

Canada’s sticky housing market is no accident, I argue, but the outcome of a combination of public underfunding; ill-conceived, though well-intentioned, urban planning policies; land restrictions; and, of course, NIMBYs.

Why housing is different

The construction of a housing block next door rarely leaves residents indifferent. Housing cannot be separated from its environment, which is why urban planning and zoning ordinances exist. But that is only half the story. Canada is a democracy in which people are free to express their opinions and understandably feel they have a right to be consulted on matters that risk altering their environment. We also live in an enviably rich nation where, social inequalities notwithstanding, the aspiration to reasonably pleasant surroundings is seen as normal, as is our corresponding right to choose and to defend those surroundings.

The inclination to protest, encapsulated in the marvellous acronym NIMBY (Not In My Back Yard), is a favourite bogeyman of progressive urbanists, seen as not only the chief obstacle to new housing but also the gatekeeper of socially and ethnically segregated neighbourhoods.⁴ However, NIMBYs are only one villain in our housing story.

Housing is also different because of its relation to land, by definition limited. Every location is unique. There are no substitutes for locations within, say, 30 minutes of downtown Toronto. The fact that houses are available at half the price in Sudbury is of little solace to a young couple where both partners work downtown. Restrictions (zoning bylaws, ordinances …) that limit land available for housing or the number of units that can be built per lot will, predicably, raise unit prices. The more the location is coveted (i.e., closer to downtown), the greater will be the upward effect on prices. Like NIMBYs, as we shall see, there are always “good” reasons for limiting residential land.

But let us not forget the understandable desire to shape cities entertained by urban planners and architects, heirs to a noble utopian tradition. Urban planning, as a profession, is traditionally wary of markets, with a natural inclination to view the profit motive with suspicion. In the ideal, well-planned city, housing should be a right, not a commodity.

Virtuous (and not so virtuous) NIMBYs

I can think of no better demonstration of virtuous motivations (certainly in the eyes of the protagonists) than the Toronto Annex story.⁵ The Annex is a highly coveted neighbourhood near downtown Toronto with magnificent Edwardian and Victorian houses, home to Margaret Atwood and other luminaries, among them Galen Weston, Jr., CEO of Loblaws, and Cleophee Eaton, heir to the Eaton’s fortune. In 2016, the city announced the planned construction of an eight-storey condo development to replace an existing two-storey commercial building. The building exceeded prescribed density and height limits but was consistent with Toronto’s stated objective of greater density to augment housing supply.

Nevertheless, the project was opposed by the neighbourhood’s eminent citizens. To get a feeling for their arguments, let me quote excerpts from open letters to local City Councillor Joe Cressy, starting fittingly with Margaret Atwood: “I join my neighbours in their concerns about setbacks that violate bylaws, and about privacy issues, and about the precedent such large violations of bylaws would set, not only for the neighbourhood but for the city.” She also expressed concern about the impact that the development would have on “six privately owned trees located on three neighbouring properties.”

Atwood’s husband, Graeme Gibson, was more blunt, suggesting that the project “hovers close to a brutal and arrogant assault on a community that has been here since the 19th Century.” Not to be outdone by his illustrious neighbours, Galen Weston wrote, “Designed as is, (the development) will change the neighbourhood in such a negative capacity and will devalue all of the assets we currently love about living here; it will no longer be the ideal place for our young family to grow up.” Cleophee Eaton and her husband emailed a long list of objections, among them balconies that would allow newcomers to view the backyards of surrounding homes.

The project was eventually built, but the consultations, often acrimonious, lasted six years. Here we come to a central dilemma in the housing debate. Surely residents have the right to express their misgivings. Many of the concerns voiced by Atwood and her neighbours were entirely valid. Their opposition improved the final project (the trees were taken care of). Seen thus, the consultations played a useful role. Yet such NIMBY opposition, whether in the end effective or not, constitutes a cost in time and resources for developers, some of whom will deem it too high. The braking effect of NIMBYs on new construction is impossible to measure, but that does not make it any less real.

Similar issues have played out in Montreal, where I live, though its housing shortage is far less acute than Toronto’s or Vancouver’s. In June 2023, in an attempt to resolve the conflict between the right of citizens to be consulted and the need to accelerate construction, Quebec passed Bill 16, which allows municipalities to exempt specified higher-density projects from local referendums, to be replaced by a written consultation process.⁶ The law has been vigorously attacked by prominent members of Montreal’s urban planning community, including several respected colleagues. The title of a letter to Le Devoir, signed by 12 personalities including a former municipal affairs minister, nicely sums up their mood: La participation citoyenne en urbanisme placée sur la voie de garage (“Citizen participation in urban planning hits a dead end”).

In any case, whether the right to be consulted is embedded in law or not, populations will react. We live in a democracy. Activists will make themselves heard. Staying on the left side of the political spectrum, opposition to a housing project of some 1,000 units (60 per cent condos, 20 per cent social, 20 per cent other rental) in the Montreal working-class neighbourhood of Hochelaga-Maisonneuve is typical of the stance of many community groups. As the organizer of the local association argued in a letter to Le Devoir earlier this year,⁷ even with 20 per cent social housing, the new housing is beyond the means of the local population, would raise housing prices, and would bring in a well-off population, changing the neighbourhood’s social fabric – in a word, gentrification, a favourite bogeyman of community activists.

The perception, valid or not, that private housing will raise prices and bring in gentrifiers remains a powerful driver of NIMBYs on the community left. To this we may add a general aversion to towers, often shared with the well-to-do (recall Margaret Atwood and friends). The City of Montreal’s avowedly progressive administration is currently engaged in a tug of war with developers over a planned residential development near the Old Port. The developer is proposing several 20-storey towers, which the city wants scaled down in the name of “human-scale” development. Montreal boroughs controlled by Mayor Valérie Plante’s Projet Montréal party have as a rule been loath to approve projects above six storeys, understandably fearful of alienating their electoral base.

Let me move to more classical NIMBYs, ostensibly on the right of the political spectrum, where I can be brief. NIMBYs here are generally associated with the suburbs. Among the more notorious recent examples in Greater Montreal are the suburban borough of Pierrefonds-Roxboro and the municipality of Pointe-Claire.⁸ In Pierrefonds-Roxboro, citizens successfully blocked a six-storey residential building, triggering a referendum. In Pointe-Claire, the mayor, elected on an antidensification platform, openly opposed two planned 25-storey residential buildings and a 20-storey tower for seniors to be built near a future light rail station. They remain blocked. This, to quote the mayor, is the popular will: her constituents prefer a suburban lifestyle (why else would they live here?), which they have every right to defend.

Protecting land, zoning, preservation and livable spaces

Land remains the primary constraint on new and/or denser housing. Here we are paying the price for almost a century of low-density zoning focused on the car and single-family home (with garden and garage if you please). The NIMBY suburbanites in the Montreal suburbs are simply defending that legacy, our original sin.

It’s difficult to undo the past. But that is what Ontario and British Columbia are trying to do. Ontario’s Bill 23 and B.C.’s Bill 43 explicitly target zoning.⁹ In both cases, municipalities are encouraged, via various carrot-and-stick measures, to “upzone” in the jargon of urban planners – that is, to allow more dwellings per lot (adding accessory units to existing dwellings, greater heights …) and reduce or eliminate parking-space requirements. I do not know whether either province is considering going as far as some jurisdictions, such as New Zealand, in expressly prohibiting municipalities from applying single-home zoning. However, upzoning, while a necessary step, does not guarantee that new housing will be built.

Both the Ontario and B.C. bills also attempt to address a stickier problem associated with zoning. Allowing greater densities is only half the challenge. Most zoning ordinances stipulate accompanying conditions, which can vary from municipality to municipality: sanitary requirements, social inclusion obligations, financing urban services. In both provinces, municipalities are asked to simplify their regulatory framework, which is easier said than done. Queen’s Park, it seems, is considering imposing fines on Ontario municipalities that do not approve building permits within a given time frame, which again raises practical enforcement issues.

But let us return to the land. We can increasingly expect preservationist and environmentalist arguments to prevail in opposition to development. The recent case of the small university city of Rimouski in eastern Quebec, faced with a severe housing shortage (rental vacancy rate below 2 per cent at last count), is fairly typical.¹⁰ The city is proposing a new development that would allow for the construction of some 800 housing units – consistent, the mayor contends, with sustainable climate-friendly development. Yet the project is being strongly opposed by local citizens as it would encroach on a local forest. Consultations are foreseen. Only the future will tell whether the 800 dwellings will see the light of day.

The most evident case of environmental concerns limiting residential land is southern Ontario’s Greenbelt, essentially surrounding Toronto.¹¹ I can think of no better example of the nonsubstitutable nature of land. Land thus withdrawn from residential development cannot be replaced with land elsewhere in Ontario with comparable access to downtown Toronto. Freeing parts of the Greenbelt for residential construction was (I use the past tense on purpose) a stated objective of Ontario’s Bill 23. We know what happened.¹² Doug Ford’s government, caught red-handed in a dubious affair of collusion between developers and politicians, totally botched the chance of opening even a small sector of the Greenbelt for residential development. The predictable outcome: the Greenbelt has become untouchable, off limits for any future government.

The Greenbelt is analogous to building a moat around Toronto. Prices in geographically constrained places (Manhattan, San Francisco, Vancouver), whether islands or peninsulas, are exceptionally high for a reason. The Economist recently ran an article on the cost, in terms of housing and income forgone, of London’s green belt.¹³ Suffice it to say that the cost is high, not only inflating housing prices in the core but also spurring leapfrog development beyond the green belt, initially intended to block urban sprawl. There is no reason why the same reasoning should not apply to Toronto. But in England as in Ontario, the green belt has become untouchable, a sacred environmental totem.

Make development pay its true cost: A good idea derailed

Housing prices are abnormally high in Toronto and Vancouver for another reason: a regulatory feature motivated by both fiscal and social considerations. Toronto was long vaunted as a model by urban planners, the first city in North America with a form of metropolitan government. This arrangement, imposed by the province, goes a long way toward explaining Toronto’s absence of extreme U.S.-style spatial segregation. But this is not the only aspect of urban governance where Queen’s Park innovated. In 1989, Ontario brought in the Development Charges Act, which allowed local governments to levy charges on developers to cover the costs of public services generated by new residential developments (roads, sewage, transit …). Many other Canadian cities also introduced development charges.¹⁴

The arguments for development charges are a priori impeccable. What could be more progressive than making developers pay the social costs of development? Make development pay for itself, so to speak, in turn facilitating construction and undercutting NIMBY opposition based on the public costs of new projects. Development charges would also provide a welcome source of revenue for local governments, lessening pressures on property taxes. Provincial governments liked development charges too, as these charges allowed them to offload services onto local authorities.

The true impact was different, a classic case of the law of unintended consequences. Simply, development charges opened a fiscal trap door, difficult to close once opened. Calculating the true cost of public infrastructure generated by residential developments is not an exact science but leaves ample room for discretion. For municipalities, the temptation to keep adding on services funded via development charges is difficult to resist. This is exactly what happened. Taking Toronto as our example, at the time of writing, the development charge for a two-bedroom apartment was $80,218 per door, encompassing charges for policing, firefighting, childcare and libraries.

The impact on housing was threefold. First, as with all fees levied on developers, the cost was passed on, in part or in whole, to consumers – renters or owners. Second, since this was an upfront charge, often also entailing drawn-out, charge-by-charge negotiations with local government, only developers with sufficiently deep pockets and patience entered the field. The predicable result was an oligopolistic housing market dominated by large developers, for which Toronto became deservedly famous. Finally, since charges were levied per unit irrespective of income generated, this created an incentive for developers to build more expensive (often highrise) units, which in part explains Toronto’s so-called missing middle – that is, two- to three-storey houses similar to Montreal’s plexes.

Here also, Ontario is attempting to roll back the past, but development charges cannot simply be undone. Bill 23 explicitly enjoins municipalities to reduce development charges, a provision predictably denounced by Ontario mayors. The province’s cities, nourished over the years on development charges, have little fiscal leeway to make significant reductions and are confronted with two equally unpalatable options: cut services or raise property taxes. I doubt that, in the end, development charges will be significantly reduced. The damage has been done.

The development charge story can be summed up by an old aphorism dear to economists: there is no free lunch. Making “others” pay for public services (here, billing developers) is a blissful illusion; in this case, it means transferring the cost to future residents. Public services – public goods in the jargon of economists – that are best provided collectively should be financed collectively. Taxes exist because the benefits of public goods (health, education and public order among the most obvious) extend beyond direct beneficiaries. Charges make sense for infrastructures whose benefits are largely limited to residents of new housing developments, such as an adjoining playground or park. But applying fees to true public goods confuses private and public responsibilities.

Inclusionary zoning: Another good idea with bad results

Confusing private and public spheres is also at the heart of so-called inclusionary zoning, popular with progressive urban planners. Here Montreal is the showcase example. In 2019, the Plante administration enacted its flagship bylaw for a diverse metropolis,¹⁵ popularly known as bylaw 20/20/20 because of the requirement for developers (for projects of five dwellings or more) to include social, affordable and family units in these proportions. The social category is largely dependent on public (provincial/federal) funding. The affordable category refers to units to be rented well below the market rate (ideally, 20 per cent less). I shall spare the reader the problems of ensuring that affordable units remain so and that the households so favoured are truly deserving. The family category refers to units with at least two bedrooms. For social units, developers can also choose to make a financial contribution in lieu of space. Finally – why keep it simple? – various permutations are possible in negotiating with the city.

Several observers at the time, including this author, criticized the bylaw, noting various possible unintended consequences. First, the cost to developers of inclusionary obligations would be passed on, at least in part, to renters of noninclusionary units. Second, the inclusionary obligations risked discouraging developers, especially smaller ones, from entering the market, producing an added upward impact on prices. Perhaps most importantly, the bylaw largely ignored the cost to developers of time for predictably lengthy negotiations.

Unfortunately for the city, the critics have been proven largely right. Since the adoption of the bylaw, no housing project has been built consistent with the 20/20/20 formula. Developers have preferred to pay the in-lieu fee, de facto sidestepping the bylaw, which says a lot about the costs of time. However, this does not tell us what impact the bylaw might have had, if any, on the decision to build (new housing forgone). No proven methodology exists for measuring such impacts. Unlike medical laboratory experiments where control populations (no medication) can be used to isolate impacts, we cannot run Montreal twice, once with and once without the bylaw.

However, Montreal’s Blue Bonnets Racetrack saga provides us with a quasi-natural experiment. The Montreal Hippodrome (Blue Bonnets), on land owned by the province, ceased to operate in 2009, leaving vacant a vast 45-hectare terrain, 20 minutes from downtown by Metro. The province ceded the terrain to the city in 2017 with the understanding that it be developed for residential use. Last year, the city called for tenders to develop the site. The terms of reference set out various obligations, not least the 20/20/20 bylaw. No developer came forward, to the city’s great embarrassment.¹⁶ The site stands empty still, waiting to be developed. It is of course impossible to rigorously attribute the city’s failure to the new bylaw. What is unarguable is that the city’s terms of reference, however well-intentioned, were economically unsound.

The city administration cannot, without losing face, openly admit that its bylaw went too far. However, it is doing so by the back door. Since the Blue Bonnets fiasco, the city has set up a working group with industry actors and has named “facilitators” in each borough with the explicit mandate to work with developers to fast-track projects.

The lesson to be drawn is the same as for Toronto’s development charges. One should not ask the private sector (or private individuals) to take on public responsibilities. Including social (subsidized) units in privately built developments is an entirely worthwhile social objective, not least to promote social diversity. But the cost should be borne collectively, by all taxpayers, not by developers (always an illusion) and, ultimately, some residents only. One reason the confusion persists (let me now sympathize with Montreal’s unlucky bylaw) is that governments, both provincial and federal, have cruelly underfunded social housing in recent years. The unintended side-effect has been an underperforming private sector, saddled with costs it should not be asked to bear.

All actors need to change: Senior governments, municipalities, you and I

Will Canada overcome its housing crisis? Perhaps, but only in part. I put aside current economic conditions – high interest rates, inflation and associated building costs. These have hurt housing construction, but they should pass. Immigration – permanent, temporary and illegal – will continue to be a major driver of housing demand, but that demand can be met if housing supply follows, which is not an insurmountable task. The principal reason for Canada’s housing gap, I have argued, is its exceptionally “sticky” (unresponsive) housing supply, for both publicly and privately financed construction.

For Canada’s housing market to become truly responsive, three conditions need to be met:

  • substantially increased public funding for social housing, not only to meet the needs of the most needy but also to eliminate the incentive to transfer the cost to private actors;
  • streamlined municipal regulatory practices, with speed of approval a primary objective, plus substantially expanded upzoned land;
  • acceptance by individuals and activist groups of limitations on the right to be consulted.

The first condition, primarily the responsibility of senior governments, is the easiest, and the one about which we can be the most optimistic. The second, as a municipal responsibility, is more difficult, although both Ottawa and the provinces have in part linked it to the first condition. The third, the reader will have guessed, is the most difficult of all, and I leave it to the reader to assess.


1 See Canada Mortgage and Housing Corporation, Housing Shortages in Canada: Updating How Much Housing We Need by 2030 (September 13, 2023).

2 The Spat with India Only Adds to Justin Trudeau’s Woes, The Economist, September 27, 2023.

3 Subsidized housing rarely accounts for more that 5 per cent of the total local housing stock and 15 per cent of rentals. The percentage of tenants in subsidized housing was 7.8 per cent in Montreal, 13.3 per cent in Toronto, and 11.1 per cent in Vancouver (CMAs, 2022 census).

4 A good example of the genre is: Richard Florida, The New Urban Crisis (New York: Basic Books, 2017).

5 I have unabashedly stolen this story from a master’s student paper in political science at Western University: Patrick Carlton, Final Report in Addressing NIMBYism, Student Case Studies, Winter 2020. For the original quotes from Atwood and others, see Betsy Powell, Margaret Atwood joins fellow Annex residents to fight condo project (, August 28, 2017.

6 Link for Quebec’s Bill 16: Projet de loi numéro 16 – Sanctionné (2023, chapitre 12) (

7 Marine G. Armengaud, Combien de projets de condos de plus avant une vraie catastrophe ? | Le Devoir, February 2, 2023.

8 Densification Opponents All Over The Island (, West Island News, July 20, 2022.

9 For Ontario: More Homes Built Faster Act (Bill 23), Bill 23, More Homes Built Faster Act, 2022 – Legislative Assembly of Ontario (; for B.C: Housing Supply Act (Bill 43), Bill 43 – 2022: Housing Supply Act (

10 Sébastien Tanguay, Rimouski, là où la crise du logement se heurte à la crise climatique | Le Devoir, September 22, 2023.

11 For maps of the Greenbelt, see

12 For an example of the media coverage of Ford’s blunder, see Ford Apologizes for ‘Wrong’ Greenbelt Decision, Vows to Reverse Land Swap, CBC News, September 21, 2023.

13 Britain’s Greenbelt is Choking the Economy.

14 The exception here is Quebec, which until recently did not allow its municipalities to levy development charges, a major reason why housing costs have been historically lower in Quebec. See also my article Why is Housing Cheaper in Quebec than in Ontario?, Policy Options, August 7, 2023.

15 Diverse metropolis: An overview of the by-law | Ville de Montréal (, May 30, 2023.

16 Thomas MacDonald, Montreal struggles to get developers behind plan for affordable housing at Blue Bonnets site | CBC News, July 2, 2023.