Key Takeaways
- Canada’s housing crisis stems not just from unaffordable prices but from a broken feasibility model for builders.
- Private developers supply ~95 % of new homes; when projects become unprofitable, supply tightens and rents rise.
- Obtaining a construction permit now takes 4‑5 years for modest projects and up to a decade in major cities, with fees often consuming 30 % of costs.
- Construction productivity has stagnated or declined, and regulatory overlap among municipal, provincial, and federal bodies adds layers of uncertainty.
- Effective solutions require coordinated government action: reduced development charges, faster approvals, shared infrastructure financing, and stable CMHC financing to restore builder confidence and long‑term housing supply.
Introduction and Historical Context
I grew up in Cape Breton, N.S., in the 1970s, where the parents of my schoolmates worked at the steel plant, coal mine, or fish plant. Though they were not wealthy, most owned homes because builders could profitably construct houses at a time when Canada was adding about 230,000 new units annually with roughly two‑thirds of today’s workforce. That era contrasts sharply with today’s reality: despite a population that has doubled, the country still produces roughly the same number of homes each year, highlighting a fundamental mismatch between demand and supply capacity.
The Feasibility Problem Beneath Affordability
Analysts often frame the housing crisis as an affordability issue—families stretched thin, young people locked out of ownership. While true, affordability is merely the symptom; the underlying disease is feasibility. As CIBC economists Benjamin Tal and Katherine Judge put it, “Prices are too high to buy and not high enough to build.” When the cost of delivering a new home exceeds what buyers can pay, developers cannot earn a reasonable return, and construction stalls.
Economics of Building Condos in Halifax
For nearly two decades, Atlantic Developments has built and sold condominium projects in downtown Halifax, helping many young people enter home ownership. Yet in the last five years, construction costs have risen far faster than the incomes of prospective buyers. This widening gap has broken the economics of condo development in Halifax—and, by extension, in much of Canada—making it increasingly difficult for builders to justify new projects.
Consequences When Developers Stop Building
Private developers are responsible for about 95 % of Canada’s housing supply. If building conventional market housing ceases to be feasible, they withdraw, and the effects surface three to five years later: fewer homes on the market, tighter vacancy rates, higher rents, and longer commutes for workers who cannot live near their jobs. The resulting supply crunch fuels the very affordability pressures that policymakers try to alleviate through demand‑side measures alone.
Regulatory Maze and Permit Timelines
Obtaining a construction permit in Canada has become a protracted ordeal. A modest apartment project in a mid‑sized city can now take four to five years from conception to completion; a large undertaking in Toronto or Vancouver may stretch to a decade. Developers must forecast economic conditions five to ten years ahead, even though institutions like the Bank of Canada rarely provide reliable forecasts beyond two or three years. This mismatch creates enormous uncertainty and discourages long‑term investment.
Funding, Productivity, and Global Comparisons
The challenges are compounded by stagnant productivity. Consultants from McKinsey & Co. note that global construction productivity has not improved in decades, while an RBC study found Canadian construction labour productivity fell by 37.3 % between 2001 and 2023. Every building site is essentially a prototype, facing unique zoning rules, approval processes, inspector requirements, and utility hookups that involve multiple levels of government and service providers. Cumulative oversight and associated fees can swallow up to 30 % of total construction costs, further eroding feasibility.
Municipal Finances and Infrastructure Pressures
Municipalities, created under provincial charters, often rely on growth‑related revenue to fund infrastructure, creating a feedback loop where they “pay for growth with growth.” Limited revenue sources and extensive infrastructure obligations force cities to levy high development charges and impose lengthy approval processes, distorting market efficiency. The result is a regulatory environment that discourages the very construction needed to accommodate expanding populations.
Government Actions Needed: Deals, Charges, and Infrastructure
If the federal government wishes to deliver more housing quickly and cost‑effectively, it must negotiate concrete agreements with provinces and municipalities that: reduce development charges, accelerate approval timelines, and share the cost of essential infrastructure aligned with population forecasts. The recent $8.8‑billion infrastructure pledge by Prime Minister Mark Carney and Ontario Premier Doug Ford—featuring development‑charge reductions, cost‑sharing on infrastructure, and a time‑limited HST rebate for buyers—offers a promising template that should be replicated across the country.
CMHC Financing and Reducing Market Uncertainty
Continued and expanded support from the Canada Mortgage and Housing Corporation (CMHC) is vital. Construction and take‑out financing programs that lower the risk for builders can make projects financially viable while keeping home ownership attainable. Moreover, Ottawa should aim to reduce market uncertainty by publishing clear, long‑term population projections and signalling consistent policy intentions, enabling developers to take calculated risks in an inherently complex industry.
Conclusion: Restoring Feasibility for Long‑Term Supply
A steady, stable supply of housing is essential for social cohesion, equality, productivity, GDP growth, and the realization of Canada’s broader prosperity ambitions. The homes built for steelworkers and miners half a century ago still shelter families today; they stand as proof that feasible construction can deliver lasting value. To replicate that success, governments must confront the feasibility barrier head‑on—by streamlining regulation, sharing infrastructure costs, and providing reliable financial backing—so that builders can once again profitably put roofs over our heads. Without addressing feasibility, any affordability‑focused measures will remain only a temporary palliation of a deeper structural malaise.