Canada's housing crisis deepens as strict rules stifle new home construction
A new report from the Canada Mortgage and Housing Corporation (CMHC) highlights key differences in how the Canadian and U.S. housing markets respond to demand. Over the past 18 years, stricter regulations and urban concentration have slowed housing growth in Canada compared to its neighbour. The findings suggest missed opportunities for thousands of new homes across the country. Between 2006 and 2024, Canada’s housing industry struggled to keep pace with demand due to tighter land-use rules, particularly in major cities. CMHC Chief Economist Mathieu Laberge noted that these regulations made it harder to build new homes quickly. In contrast, the U.S. benefited from a broader network of cities with similar job opportunities, allowing developers to respond faster to housing needs.
The report found that housing starts in Canada could have been nearly 30% higher if regulatory barriers had been reduced. Unlike the U.S., where demand is spread across many urban centres, Canada’s housing pressure is concentrated in just a few large cities. This concentration reduces incentives for rapid construction, as builders face more constraints. Experts point to municipal governments as the main bottleneck. Local planning rules and zoning restrictions often delay or block new developments, even when demand is high. The result is a slower, less flexible housing market compared to the U.S., where cities compete more freely for growth.
The CMHC’s analysis shows that without regulatory changes, Canada’s housing supply will continue to lag behind demand. The findings underscore how municipal policies shape construction activity and limit growth. If barriers had been eased, nearly a third more homes could have been built over the past two decades.
