The road to affordability is built one home at a time

The housing market, like any other, is governed by the laws of supply and demand.
When demand increases faster than supply, prices go up; when supply increases faster than demand, prices come down.
It’s not a question of what is built or of whether the owner is a private actor, an NPO or the municipality. It’s a question of numbers. The Canada Mortgage and Housing Corp. agrees. According to its most recent estimates, the country would need some 5.1 million more housing units to return to the level of affordability we enjoyed in 2004.
Targets vary by province, of course. British Columbia and Ontario need to build a lot more to contain rapidly rising rents in cities such as Toronto and Vancouver, compared to Manitoba or Newfoundland and Labrador. Alberta would need to build an estimated 410,000 housing units by 2030 to get there. At the current rate, some 280,000 will be built. While that’s not as bad as some other provinces, it remains far off the mark.
Still, each additional unit that goes up gets us closer to the goal. And that’s true regardless of the price level or the type of housing.
When a family moves into a new home, be it a house or a condo, it vacates another housing unit — generally a less expensive one than the place they’re moving into. This housing unit will in turn be occupied by another family, which will leave its former home vacant, and so on. This concept, known as a “migration chain” or “moving chain,” was observed in a study carried out by University of Notre Dame economist Evan Mast in 2023.
Mast looked at 52,000 residents of new buildings, retracing the housing they occupied beforehand, and identifying the current occupants of those units, retracing their former housing, and so on for six rounds of moving.
Instead of getting bogged down in ever-more complex regulations for developers and costly housing projects built by government, municipalities need to change tack.
He observed that for every 100 new housing units built, from 45 to 70 affordable units became available in below-median income neighbourhoods. Of these, 17 to 40 units were liberated at price levels affordable for the least fortunate 20 per cent of households.
Mast is not the only one to have made such observations. A team of Finnish researchers looked into the case of Helsinki and found that for every 100 new housing units built, this moving chain made 31 units available at price levels affordable for the least fortunate 20 per cent of households.
While the moving chain’s positive effects have been demonstrated, these are not felt overnight. It generally takes around three years for this series of moves to produce most of its effects. Having said that, the advantage of this method is that it allows for sustainable affordability — so far as cities do not prevent the mechanism from operating by blocking new construction.
Building new housing units, even expensive ones, entails positive effects on society as a whole.
Instead of getting bogged down in ever-more complex regulations for developers and costly housing projects built by government, municipalities need to change tack. They need to simplify and accelerate the issuance of permits, reduce the complexity of zoning and abolish superfluous taxes on the construction of new housing that only serve to increase housing prices.
By reducing these bureaucratic burdens, our cities would be doing what’s needed to build the affordable housing of tomorrow.
They owe it to the younger generations, who are seeing the dream of becoming homeowners evaporate before their eyes.
Michel Kelly-Gagnon is Founding President of the MEI and Gabriel Giguère is a Senior Policy Analyst at the MEI. The views reflected in this opinion piece are their own.