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Canada’s housing crisis: the differing impact on municipalities and what they can do about it

Canada’s housing crisis: the differing impact on municipalities and what they can do about it

Synopsis
4 Minute Read

Canada's housing crisis continues to impact communities both big and small. But unique opportunities exist to mitigate the impacts felt across the country.

Partner, Consulting

In December 2023, the Government of Canada took a major step by declaring a housing crisis. Across the country, home costs have skyrocketed and the issue has grown to become a key concern for citizens, industry, and policymakers at all levels of government.

The housing shortage has led to increased rates of unhoused people, inadequate housing, and affordability challenges. To solve the crisis, the federal government is looking at taking transformational action, adopting some strategies used to address housing challenges facing Canada after World War II.

Although the housing challenges are similar to those experienced during that time period, the solutions must be different. Intergovernmental coordination is both more important and harder to achieve. A federal plan can only work if it’s coordinated with all the unique municipal components, like planning, permitting, and zoning. Their plan will also need to address the different impacts of a housing crisis on urban, mid-size, and rural communities.

In this insight, we’ll explore the causes of Canada’s housing crisis, unpack the challenges happening in different communities, and identify short-term solutions that municipalities can explore right now to help drive change.

Creating an understanding of the different complexities and focusing on collaboration will be key to successfully addressing the crisis. Our goal is to start the conversation, leverage our cross-country insights, and be a part of the solution.

What's causing the housing crisis in Canada?

Access to affordable and suitable housing remains a critical issue for many individuals and communities across Canada. There are several key hurdles impeding this access, including:

  • Affordability constraints: Skyrocketing housing costs, particularly in urban centres, have created a significant affordability gap. Many Canadians, especially those in lower income brackets, find it increasingly difficult to secure housing that consumes less than 30 percent of their before-tax income.
  • Limited availability: The demand for affordable housing surpasses the available supply, leading to fierce competition and long waitlists for subsidized and low-income housing options.
  • Accessibility and suitability: Housing options that meet specific accessibility and suitability requirements, such as those for people with disabilities or unique family needs, can be scarce and often come at a premium.
  • Regional disparities: Urban-rural divides and regional economic disparities can exacerbate the housing crisis. Urban areas in particular face acute shortages due to high demand.
  • Policy and regulatory barriers: Complex zoning regulations, permitting processes, and bureaucratic hurdles can impede the development of affordable housing projects, leading to delays and increased costs.
  • Lack of community services: Limited access to essential services, such as healthcare, education, and public transportation, can render certain housing options less viable for individuals and families.
  • Unhoused populations and inadequate shelters: The unhoused population remains a pressing issue, with individuals and families struggling to find even basic shelter. This is a result of a complex interplay of economic, social, and personal factors that all need attention.
  • Market pressures and speculation: Speculative investment in the housing market can drive up prices, making it even more challenging for first-time buyers and low-income individuals to enter the market. Speculative investment refers to the practice of purchasing assets, such as real estate, stocks, or commodities, with the expectation of making a profit based on anticipated price increases in the future.

How municipalities can access and use federal funding for housing projects

The Federal Government introduced the Housing Accelerator Fund (HAF) and the Canada Housing Infrastructure Fund to boost housing availability and affordability in response to Canada’s severe housing shortage. Learn how your municipality can access the funds and take meaningful steps to addressing housing challenges.

How different regions are impacted by housing challenges

Overall impacts

Housing challenges in Canada extend beyond the boundaries of major cities, affecting communities of all sizes. For example, unhoused populations are not only growing in metropolises like Toronto but also in smaller communities such as Sudbury, Ontario, which has a population of approximately 165,000.

The pervasive nature of the issue prompts a comprehensive examination of its causes and impacts on diverse regions.

The urban experience

Focusing on major Canadian cities like Toronto, Vancouver, Calgary, and Halifax, we encounter unique challenges that define the urban housing landscape.

  • Varying spatial constraints: In densely populated areas, the scarcity of available land for construction amplifies the housing crisis. For instance, Vancouver, Toronto, and Halifax face spatial constraints, making it challenging to address housing needs through traditional means. Conversely, Calgary's dilemma lies in striking a delicate balance between urban development and avoiding excessive sprawl.
  • Affordability strains: The high demand for housing, coupled with limited availability, contributes to soaring real estate prices. This challenge particularly affects residents striving to secure affordable housing options, making it imperative to explore innovative strategies to enhance affordability.
  • Infrastructure pressures: Aging systems, such as transportation networks and utilities, struggle to keep pace with rapid urbanization. Addressing these infrastructure challenges becomes paramount to ensure sustainable urban development and a high quality of life for residents.
  • Economic disparities: As urban areas continue to attract diverse populations, ensuring equitable access to housing opportunities becomes a critical concern. Tailoring housing solutions to accommodate various income levels is essential for fostering inclusive urban communities.

What’s happening in mid-size communities

Mid-sized communities in Canada can vary widely and classification depends on specific criteria, such as population and economic factors. Some examples include Red Deer, AB, Saskatoon, SK, London, ON, Kelowna, BC, Trois-Rivieres, QC, and St. John’s, NL. Mid-size communities present unique challenges in the realm of housing such as:

  • Affordability struggles: Mid-sized communities frequently grapple with affordability issues. The demand for housing often outpaces the supply, causing housing costs to rise. This phenomenon not only affects residents but can also deter potential newcomers.
  • Limited housing diversity: A lack of varied housing types and styles can hinder a community's ability to accommodate a diverse population with different needs and preferences.
  • Infrastructure constraints: Aging infrastructure may not adequately support the growing population, leading to issues such as insufficient utilities, transportation bottlenecks, and strained public services.
  • Economic development impact: The relationship between housing and economic development in mid-sized communities is crucial. As these communities strive for growth, attracting businesses and industries, there is often a strain on housing resources. The mismatch between job opportunities and available housing can create imbalances in the local economy.

Rural communities

In rural settings, the impacts of housing challenges manifest in distinctive ways.

  • Spillover effects: Spillover effects from urban areas emerge as a key concern for rural communities. As urban centers expand, the demand for housing extends into nearby rural regions, creating a strain on existing resources and driving up property prices. This phenomenon necessitates a nuanced approach to balance urban-rural dynamics.
  • Agricultural interface: There is an intricate relationship between agriculture and housing. In farming communities, the need for housing close to agricultural operations is paramount. The challenge lies in striking a balance between providing suitable living arrangements for farmworkers and preserving valuable agricultural land.
  • Emerging industries and housing gaps: The development of new industries in rural areas, such as tourism in places like Bragg Creek, AB, is a positive trend but it brings new challenges. The industry growth often outpaces the development of adequate housing for the workforce that must relocate to support these industries. Addressing this housing gap becomes crucial for sustaining and maximizing the benefits of emerging rural economies.
  • Community sustainability: Sustainable development is a recurring theme regarding rural housing challenges. Striking a balance between economic growth and preserving the unique character of rural communities is essential. Sustainable housing solutions should align with the long-term needs and values of the local population.

Short-term strategy options for municipalities

What can municipalities do about this issue now?

Addressing the complexity of housing challenges requires a multifaceted approach, acknowledging that quick fixes may not be feasible at any level of government. Nevertheless, municipalities can implement short-term strategies to initiate positive change, and we stand ready to assist in developing and executing these strategies.

This issue is complex and can’t be tackled by a few quick policy changes at any level of government. But municipalities have some options and MNP can help them with strategy development and execution.

Defined strategic direction

A critical short-term step for municipalities involves defining a clear strategic direction for housing initiatives. This includes developing a comprehensive affordable housing strategy that outlines specific goals, timelines, and targeted outcomes.

Defining a strategic direction provides a roadmap for municipalities to address immediate housing needs and ensures a focused, goal-oriented approach.

Our expertise in strategic planning stands ready to assist municipalities in articulating and executing a defined strategic direction for housing, fostering tangible and measurable improvements in their communities.

Digital building codes

Many small- to medium-sized municipalities across Canada still rely on outdated formats like PDFs or printed materials for their building codes.

A transformative short-term strategy involves digitizing building codes, creating an accessible online resource. By centralizing all building code information in an interactive, online platform, stakeholders at every stage of the building process gain real-time access to relevant data.

This not only enhances efficiency but also fosters innovation by leveraging technologies like artificial intelligence.

Digital building codes streamline approvals, fostering a more agile and responsive regulatory environment that expedites construction projects.

Learn more about digital building codes and how they could transform municipal operations in our insights.

Planning/permitting and service delivery reform

In the short-term, municipalities can embark on planning and permitting reforms to streamline bureaucratic processes.

By simplifying and expediting approval procedures, local governments can facilitate quicker development without compromising safety or quality.

Collaborating with stakeholders, including builders, architects, and community representatives, is crucial for identifying bottlenecks and implementing pragmatic reforms. These immediate changes contribute to a more responsive and business-friendly regulatory environment.

Tax and financial incentives

Municipalities can leverage a combination of tax and financial incentives as a short-term strategy to stimulate housing development, ideally incorporated and aligned to their formalized strategies and Community Improvement Plans (CIP).

By offering targeted tax breaks for developers and exploring financial incentives, local governments can encourage private investment.

These short-term measures not only support immediate housing needs but also lay the foundation for long-term community development. Aligning these incentives with specific housing goals ensures a strategic and impactful approach to addressing housing challenges.

Enhanced service delivery models and program development

Municipalities can explore enhanced service delivery models and program development to meet the urgent housing needs of their communities.

This involves collaborating with community organizations, non-profits, and private-sector partners to create innovative programs that provide housing solutions.

Whether through rent subsidy programs, community land trusts, or public-private partnerships, municipalities can diversify their approach to housing initiatives, ensuring a more comprehensive and inclusive response to the immediate needs of residents.

Our expertise in program development enables us to assist municipalities in designing and implementing effective strategies tailored to their unique challenges and goals.

The first step is understanding your situation

Municipalities face complex and multifaceted housing challenges and singular solutions will not fix the crisis.

The dynamic nature of each municipality requires a more cohesive and tailored approach that considers its unique context, population, and existing infrastructure.

Recognizing the intricate interplay of economic, social, and regulatory factors, we emphasize the importance of comprehensive strategies that address the specific needs of each community.

Our commitment lies in assisting municipalities in developing and implementing these nuanced solutions, ensuring a strategic alignment with their distinct circumstances.

Contact us

To explore your options for addressing housing challenges, contact Sylvia Tello, PMP, Partner, Consulting.

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