The magnitude of the housing shortage is huge, the problems chronic, but the housing crisis is solvable.
Throughout the province and country, the housing crisis is marked by high rents and prices, a scarcity of homes, displacement, homelessness and the quiet exclusion of people from entire neighbourhoods.
While a boon to some, high housing costs are a millstone weighing on many households, a drag on the economy and a barrier to progress in a range of other policy areas including poverty, affordability, climate action and child care.
The crisis is multifaceted, but three key areas of action stand out as fundamental to address it:
- Non-market housing: a major expansion of public investment is needed.
- Overall housing supply: tackling a severe shortage of homes including market housing.
- City-level roadblocks: ending apartment bans and other municipal barriers to housing.
We have seen a flurry of housing policy from different levels of government in recent years that aims to address precisely these issues. Yet, there’s less to this flurry of activity than meets the eye. Reforms target the right levers—non-market housing, more supply and zoning reform—but fall short in scale and implementation.
With the right policies in place, real progress could be made relatively rapidly.
1. Non-market housing: far more investment needed
While market housing supply is important, the market alone cannot solve the housing crisis. It is essential to significantly increase public investment in non-market housing to meet the needs of the people worst affected by the housing crisis, including those with low and modest incomes and racialized and Indigenous communities.
For decades, Canada has underinvested in public, non-profit and co-op housing.
The result is that today only about 3.5% of the country’s housing stock is social housing, which is half the OECD average. While there’s been some reinvestment in recent years—both federally and provincially—it’s nowhere near the scale that’s needed after decades of neglect.
The federal government did once invest substantially in social housing—building roughly 16,000 new units per year in the 1970s and 80s—but funding cuts in the 1990s saw that wither. And the provinces—including BC—did not fill the gap.
The consequences: wait-lists for social housing have grown rapidly and homelessness has proliferated in one of the world’s richest countries. Failing to ensure people can meet their housing needs comes at enormous social and economic costs.
To meet the backlog of need—and to significantly increase the amount of non-market housing in the overall housing system—BC should build at least 25,000 new non-market homes each year. This would be an ambitious undertaking and all levels of government need to contribute. But it can be done if the necessary funding and political will are in place.
”It is essential to increase public investment in non-market housing.”
The provincial government currently targets only 4,500 new non-market homes per year. This is a major improvement from the previous BC Liberal government but not nearly enough. In turn, the new federal Build Canada Homes program is expected to create only an average of about 5,200 new homes per year spread across the entire country, according to the Parliamentary Budget Officer. In fact, the same report projects that overall federal housing funding will decline by 56% by the 2028-29 fiscal year as programs expire and cuts in Budget 2025 take effect.
Throughout Canada, including in BC, public investment in non-market housing is nowhere near where it needs to be.
To ramp up non-market housing production, the BC government should significantly increase capital grants to projects under programs like the Community Housing Fund to ensure that good non-profit housing projects aren’t turned away due to lack of funds. In turn, the federal government should step up with much more robust funding for social housing Canada-wide.
The province should also take the initiative itself to develop housing projects at a much larger scale, using a self-supported debt model to reduce the impact on government budgets. While rental income can defray some costs, subsidies, grants and land contributions are crucial to achieve deeper affordability, especially for supportive and rent-geared-to-income housing.
To pay for stronger investment in non-market housing, BC should tax a portion of the staggering levels of land wealth in this province, particularly at the high end of the housing market. Indeed, the value of land under detached houses alone in Greater Vancouver was $744 billion in 2024 and residential property values in BC increased by $1.7 trillion over the past two decades.
2. Housing shortage: the rent is too damn high and scarcity is a big reason
The shortage of housing supply is a fundamental element of the crisis, alongside the shortage of non-market homes. We need far more homes of all kinds, including private market housing.
For some it’s obvious there’s an overall shortage of homes, but for others there’s still skepticism. A few key indicators can help us see both the rate at which we’ve actually been building homes and the scale and significance of the housing shortage in BC and Canada.
I still hear the claim that we’ve been building housing at a rapid rate—and yet things haven’t improved. The reality is, on a per-capita basis, housing starts and completions in BC and Canada have long been substantially lower than the levels of the postwar decades (see Figures). Even without adjusting for population, Canada only recently matched the peak in raw housing completions of the 1970s (in what was a country with a far smaller population at the time).
Among the indicators of the resulting housing shortage has been low rental vacancy rates in many Canadian cities over a long period of time. A balanced or healthy vacancy rate would be at least 3%, but in our most expensive cities they’ve typically been lower for decades, often under 1% in Vancouver. Low vacancy rates present a huge problem for renters, especially for those with middle and low incomes as they give landlords enormous leverage.
When vacancy rates are low, reflecting a scarcity of homes, this tends to drive up market rents, whereas under higher vacancy rates, rents rise more slowly or drop. This is a consistent pattern over decades that is observed in a wide range of cities across Canada, as Jens von Bergmann’s analysis shows.
This year has seen a welcome uptick in vacancy rates and a decline in asking rents in some cities like Vancouver and Toronto, a result of increased supply and easing population growth. But for vacancy rates and rents to keep improving we’ll need a sustained, structural increase in new housing creation. The population effect—largely driven by recent lurching policy swings in immigration—will be short-lived and new housing starts are trending down in the latest data.
A chronic scarcity of homes and high rents also mean that many people are unable to form the independent households they would like to establish. Instead, people are forced to pool their income to afford housing. This takes many familiar forms: young adults living with parents longer, unwanted roommates and unwanted multi-family household arrangements. Such living situations can be by choice, but data show they are more common in high-rent cities.
This phenomenon is referred to as “suppressed household formation” or “doubling up”. In Metro Vancouver alone, estimates suggest there are 130,000 to 200,000 suppressed households. This represents a huge pent-up demand for additional homes among people who live in the region, not accounting for those already driven out by high rents or who would like to move here.
”Homelessness and housing scarcity are closely linked.”
As Jens von Bergmann and Nathan Lauster point out, even if the entire housing stock was socialized tomorrow, we’d still have a severe shortage of homes, reinforcing the need for both non-market and supply side action.
Finally, homelessness and housing scarcity are also closely linked. As one team of US-based housing researchers put it, “homelessness is a housing problem.” Careful analysis finds that rates of homelessness across cities track closely with housing shortages as measured by vacancy rates and rents. Their data show that even economically depressed cities like Detroit, where rental vacancy rates are high, have far lower homelessness rates than richer cities like New York or San Francisco, where housing is scarce and vacancy rates are low.
To address and ultimately end homelessness, we urgently need more non-market affordable and supportive housing, strong tenant protections and income supports, among other things. We also need to address, however, overall housing shortages, which appear to be an important factor driving the rates at which people are pushed into homelessness in a region. When housing supply is scarce, it is the most vulnerable who are squeezed out of the system.
The Canada Mortgage and Housing Corporation estimates that Canada needs to roughly double housing starts for the next decade to about 480,000 new units per year. Analysis by independent experts similarly suggests that Metro Vancouver needs to roughly double housing construction—amounting to about 600,000 new units over a decade.
Yet, as a recent Parliamentary Budget Office report notes, “the [federal] government has not yet laid out an overall plan to achieve this goal” of doubling homebuilding. The weak trajectory of housing starts tells the same story. We’re nowhere near on track and essential policies to make it happen are still not in place at the municipal, provincial or federal levels.
3. City-level roadblocks: apartment bans and more
Cities control some key policy levers to enable the construction of more non-market and market housing alike.
Yet in cities like Vancouver, exclusionary zoning policies mean apartment buildings are effectively banned on three quarters of residential land. The most expensive forms of low-density market housing (detached houses) can be built virtually anywhere, but not apartment buildings (the case of multiplexes is discussed below). Seeing a city like Vancouver from above helps illustrate the reality of its exclusionary land use policy in action (see image).
Apartment bans of this kind are damaging in several ways as I have discussed in a previous analysis. First, they severely restrict the number of new homes that can be created in most areas and increase the cost of scarce apartment-zoned land. In a housing shortage, public policy should ensure that land where apartments are permitted is plentiful—not scarce and expensive.
Second, even in areas where they are allowed, building new apartments in our cities typically requires going through lengthy rezoning processes that delay housing being built and increase costs. For example, in Vancouver, nonprofit housing developers estimate that a rezoning process can easily cost $500,000 to $1 million. This undermines affordability in projects that do proceed while others are made financially unviable.
Apartment bans also drive displacement of tenants in existing apartment areas. With apartments blocked in wealthier detached-housing zones, development is steered towards areas with older apartment buildings, driving demolitions and displacing renters.
Exclusionary zoning relegates apartments largely to arterial roads, exposing renters to noise, pollution and car traffic that harms health and well-being. Blocking apartments in large swaths of central cities pushes development further out, creating sprawl, long commutes and more climate pollution, while increasing infrastructure costs per capita.
Moreover, when people are excluded from large high-productivity cities by housing policy failures, this means excluding them from job opportunities and higher wages. This, in turn, hurts economic productivity and widens inequality.
We simply can’t achieve an ambitious build-out of non-market housing or double overall homebuilding with apartment bans and other city-level roadblocks to housing in place.
What’s possible – and what’s being blocked
Two examples help show what’s possible—and what’s being blocked by exclusionary zoning.
First, the Squamish Nation’s Sen̓áḵw project shows what happens when exclusionary zoning simply doesn’t apply. The Nation is building 6,000 rental homes on reserve lands in Kitsilano, including 1,200 below-market rental homes—which is possible because of the Nation’s leadership and because reserve lands aren’t constrained by the city’s standard exclusionary zoning policies.
Second, the city of Auckland, New Zealand shows what meaningful broader zoning reform can do. After significantly easing its own exclusionary zoning policies, the city saw a surge of homebuilding with 22,000 new homes approved above trend between 2016 and 2021 and inflation-adjusted rents stabilized even as they rose in the rest of New Zealand. One study found that rents in Auckland would have been 28% higher if the city hadn’t been upzoned and another analysis suggests that rents at the lower end of the market eased even more than the median.
The Auckland findings are consistent with the broader research on the effects of adding new housing supply. One of the clearest mechanisms is through “moving chains”: when new market housing opens, higher-income households move into it, freeing up older units and the effects ripple outward into more modest parts of the market. That’s exactly what researchers found in Helsinki: “new market-rate construction loosens the housing market in middle- and low-income areas even in the short run.” US and Canadian evidence points to the same basic dynamic. The benefits are even more pronounced when new social housing is built, since the new units themselves are immediately more affordable while moving chains still free up older homes.
Didn’t BC already fix zoning?
Despite a prominent set of provincially driven reforms in BC, apartment bans are still in place. The Province required cities to update bylaws to allow small multiplexes in detached house areas, but key standards were non-binding and many cities responded with highly restrictive rules. For example, Vancouver’s multiplex policy was designed to severely limit uptake by restricting floor space, imposing long discretionary approvals and charging extra fees relative to detached houses. The result: an estimated 30,000 homes will not be created over 10 years compared to if the city had adopted provincial guidelines (or if those guidelines had been required).
Another headline provincial reform was the transit-oriented areas for housing, especially allowing more homes near Skytrain stations. This was a positive step, but it covers only a fraction of the areas imposing apartment bans and project-by-project rezonings are often still required.
This is what the housing policy slow-roll looks like in practice: reforms that sound structural, but are implemented in ways that largely preserve the status quo of housing scarcity.
If the goal is to actually end exclusionary zoning, cities like Vancouver must allow at least six-storey apartments by right, without discretionary rezoning hurdles, anywhere that it’s legal to build a detached house. Indeed, allowing low-rise, single lot apartments broadly across cities would reduce project costs and create new homes faster. Auckland’s reforms also suggest that this would improve construction productivity and competition among home builders.
Just as importantly, cities must eliminate other barriers that function as de-facto apartment bans such as frontage requirements that block single-lot apartments or onerous fees that undermine housing viability. Our most expensive cities increasingly rely on hefty fees on new apartments to fund public infrastructure, but the result is fewer homes built and higher rents and home prices—shifting the burden onto renters and first-time buyers (and driving up the costs of public infrastructure per capita, which is cheaper for denser housing like apartments).
Yet, a recent federal promise to reduce such fees by half and provide replacement funding for municipal infrastructure has already been watered down.
Conclusion
The housing crisis is the product of public policy choices: chronic underinvestment in non-market housing, decades of underbuilding and exclusionary zoning that blocks apartments across most residential land in our most expensive cities. Those policies can be changed.
Solving the housing crisis requires scaling non-market housing to match the backlog of need, building enough homes of all kinds to restore and sustain healthy vacancy rates and ending apartment bans and other municipal “poison pills” so projects can proceed by right, faster and at lower cost.
There is no shortage of housing policy announcements these days. But there is a shortage of follow-through and scale. The question is whether governments keep slow-rolling reforms that largely preserve the status quo of scarcity—or build a housing system designed to deliver abundant, affordable homes for all.
The housing crisis is solvable, but it will not be solved by half-measures.
You must be logged in to post a comment.