scaling-up-affordable-housing
Scaling Up Affordable Housing Through A ‘Build Canada Homes’ Proposal
Introduction
Scaling up affordable housing is no longer a theoretical exercise for Canada; it is an urgent imperative required to end homelessness and fulfill the human right to adequate shelter. According to a pivotal August 2025 report by Dr. Carolyn Whitzman and Priya Perwani, titled Scaling up affordable housing through a 'Build Canada Homes' proposal, the nation faces a deficit of at least 4.4 million affordable homes.
This comprehensive analysis, funded by Maytree and produced by the University of Toronto's School of Cities, argues that current financing mechanisms under the National Housing Strategy have failed to meet affordability targets.
To rectify this, the authors propose a radical shift toward a federal "direct build" model capable of delivering 200,000 non-market units annually.
This article dissects the proposal, examining the methodology, financial modeling, and policy frameworks necessary for scaling up affordable housing to a level that matches the scale of the crisis.
The Magnitude of the Crisis and the Failure of Current Models
The context for scaling up affordable housing in Canada is defined by a widening gulf between household incomes and housing costs. The report highlights that despite federal goals to eliminate chronic homelessness and lift hundreds of thousands of households out of core housing need, the results have been starkly insufficient.
Since the inception of the National Housing Strategy in 2018, fewer than 30,000 new non-market homes have been enabled. This represents merely 2-3% of total completions, a figure that has caused the share of non-market housing in Canada's total stock to diminish from 6.4% in 1991 to just 4.1% in 2021.
The statistics regarding affordability are equally alarming. In major urban centers like Vancouver and Toronto, the "median multiple"—the ratio of median home prices to median household income—has reached levels deemed "impossibly unaffordable."
In Vancouver, this ratio sits at 11.8, meaning a median-income household would need to spend four times its capacity to afford a home. Furthermore, asking rents to have surged, with no major Canadian city where a sole minimum-wage earner can afford a one-bedroom apartment.
The report posits that scaling up affordable housing cannot be achieved through market-based solutions alone. Simply increasing supply without addressing the tenure and ownership structure risks exacerbating the crisis, as new market units remain inaccessible to the 60% of the population ranging from very low to median incomes.
The solution, therefore, lies in a massive expansion of the non-market sector, which includes public, cooperative, and limited-profit mission-based developers.
The 'Build Canada Homes' Direct Build Model
At the heart of the proposal is a new mechanism for scaling up affordable housing: the "Build Canada Homes" initiative. This model diverges from traditional grant-based or loan-leveraging approaches. Instead, it advocates for a direct building approach where the federal government acts as the infrastructure investor.
The proposal suggests a total federal commitment of $40 billion per year over the next decade. This investment aims to construct 80,000 units annually at an average cost of $500,000 per unit.
A defining feature of this model is asset retention. Under this framework, the federal government would contract with non-market developers to build on government-owned land, but the government would retain ownership of the resulting assets. This structure avoids immediate fiscal impacts on the treasury, as the asset remains on the federal books.
Depreciation is offset by rental income remitted by the non-profit operator. Much like a toll on a new bridge, residents pay rent to cover the expenses incurred by the government over the life of the asset. This creates a "revolving fund" where rent payments return to the fund to finance future projects, ensuring long-term sustainability.
The model is designed to be flexible, applicable not only to new construction but also to the acquisition of market buildings and the conversion of underutilized structures, such as office towers, into residential use.
By focusing on cost-based rather than market-based financing, the program ensures that rents are set according to what households can afford, rather than what the market will bear.
This approach is critical for scaling up affordable housing because it decouples the cost of living from speculative real estate trends.
Key Financial Mechanisms and Government Roles
For the "Build Canada Homes" model to succeed in scaling up affordable housing, it requires a coordinated effort across all levels of government. The report outlines specific contributions required from municipal, provincial, and federal entities to make the pro formas viable.
Municipal Contributions:
Local governments play a crucial role by providing land at no cost and streamlining approvals. The report recommends "as-of-right" zoning for non-market projects, allowing apartment buildings and collective dwellings of up to four storeys in all residential neighborhoods.
Additionally, municipalities would waive development charges and property taxes, significantly reducing the upfront capital required for development.
Provincial and Territorial Contributions:
Provinces are tasked with complementing federal infrastructure investment with social infrastructure. This includes waiving land transfer taxes and educational taxes, contributing surplus government land, and, most critically, providing rent supplements or increasing social assistance rates.
The report notes that for deeply affordable units, particularly supportive housing, provincial health and social supports are essential. Without these income supports, even low-cost non-market housing may remain out of reach for the most vulnerable populations.
Federal Leadership:
The federal government's primary role is to provide the capital and the land base. The proposal suggests entering into portfolio-wide conditional agreements with provinces and territories.
These agreements would tie federal funding to specific outcomes, such as the implementation of homelessness prevention plans and the adoption of zoning reforms that facilitate scaling up affordable housing.
Case Studies: Proving the Viability of Non-Market Development
To demonstrate the practical application of this model, the report analyzes four distinct pro formas provided by active non-market developers across Canada. These examples illustrate how scaling up affordable housing can be tailored to different demographics and geographic contexts.
1. Supportive Housing in London, Ontario:
The first example involves Indwell, a provider of supportive housing. The project entails a 42-unit building for single adults experiencing homelessness. With donated land and tax waivers, the construction cost is approximately $350,000 per unit. Rents are set at the social assistance rate of $385 per month.
While this rent does not cover operating costs, the gap is filled by operating funding from the Ministry of Health. This case underscores that scaling up affordable housing for high-acuity individuals requires integrated health and social service funding alongside capital investment.
2. Student Housing in Montreal, Quebec:
UTILE, a non-market student housing developer, presents a 170-unit project in central Montreal. Utilizing off-site modular construction and free government land, the cost per unit drops to under $300,000. Rents are set at $838 per month, affordable for low-income students.
The model suggests that scaling up affordable housing for students can be achieved through density, efficient construction methods, and the utilization of post-secondary institutional land.
3. Mixed-Income Housing in Toronto, Ontario:
Windmill Developments' non-market affiliate, Nesting Ground, proposes a 60-unit mixed-income building. With a cost of roughly $500,000 per unit, the project uses cross-subsidization. One-third of the units are deeply affordable for low-income households, while two-thirds are rented at moderate and median-income rates ($1,700 to $2,550 per month).
This example demonstrates that scaling up affordable housing can include mixed-income developments where higher rents subsidize lower ones, provided land and financing costs are minimized.
4. High-Density Housing in Vancouver, British Columbia:
The Community Land Trust Foundation of B.C. offers a 168-unit high-rise project. Despite higher construction costs in Vancouver (nearly $650,000 per unit) and stringent environmental standards, the model remains viable through a combination of federal financing and an equity gap covered by grants.
The project features a diverse mix of unit sizes, from studios to four-bedroom family units, proving that scaling up affordable housing can address the needs of families, not just singles.
Strategic Pathways for Scaling Up Affordable Housing
The report outlines a clear roadmap for scaling up affordable housing to meet the target of 200,000 non-market units per year. This target represents 40% of the federal goal of 500,000 new homes annually. The proposed breakdown includes:
- 30,000 supportive housing units for seniors and people with disabilities.
- 20,000 student housing units.
- 100,000 mid-rise units for singles, couples, and families.
- 50,000 high-rise units in major urban centers.
Achieving this volume requires learning from international best practices. The report draws heavily on models from Austria, Denmark, Finland, and France. These nations successfully utilize cost-based financing, long-term fixed-rate national government finance, and revolving funds.
For instance, Vienna's model relies on limited-profit housing associations and land banking, while Finland's "Housing First" approach has nearly eradicated homelessness through permanent supportive housing.
A critical component of scaling up affordable housing in Canada is the reform of the construction industry itself. The report advocates for investing in an industrial construction sector that utilizes pre-approved, replicable designs.
This would reduce approval times and construction costs, potentially lowering the cost per square meter to levels seen in Singapore and Vienna, which are roughly half of Canada's current costs.
Furthermore, the conversion of underused office buildings into collective housing is identified as a rapid method to increase supply at a lower cost per square meter.
Overcoming Barriers to Scale
While the "Build Canada Homes" proposal offers a robust framework, the report acknowledges significant barriers. The current Liberal commitment of $10 billion in financing and $25 billion for innovation is deemed insufficient, likely yielding only 20,000 homes—a pilot rather than a solution.
To truly impact the crisis, the report argues for a sustained $40 billion annual investment, representing roughly 2% of Canada's GDP.
Another challenge is the reliance on private capital. Traditional investment models often require returns of 2-5%, which can conflict with the goal of deep affordability. The proposed model mitigates this by having the federal government retain ownership and provide low-cost financing, thereby reducing the pressure for high yields.
However, the report emphasizes that scaling up affordable housing will still require additional direct government investment to sustain deeply affordable units where rent revenue cannot cover full operating costs.
Zoning and regulatory hurdles also pose significant risks. The success of the model depends on municipalities adopting as-of-right zoning and waiving fees.
Without these local concessions, the cost savings from federal financing and free land could be eroded by delays and levies.
The report suggests that federal-provincial-territorial agreements should include conditionalities that mandate these local reforms, ensuring a cohesive national strategy for scaling up affordable housing.
Conclusion: A Blueprint for a Housing Revolution
The Scaling up affordable housing through a 'Build Canada Homes' proposal provides a rigorous, evidence-based blueprint for transforming Canada's housing landscape. By shifting from a market-reliant approach to a direct-build, non-market infrastructure model, the federal government can unlock the potential to deliver hundreds of thousands of permanently affordable homes.
The key to scaling up affordable housing lies in the synergy of federal capital, provincial social supports, and municipal land and zoning reforms.
The document makes it clear that the status quo is unsustainable. With homelessness rising and affordability metrics reaching historic lows, incremental changes are no longer sufficient.
The proposed model, grounded in successful international precedents and validated by Canadian case studies, offers a path forward. It reimagines housing not as a commodity for speculation but as essential social infrastructure.
As Canada looks to the future, the principles outlined in this report—cost-based financing, asset retention, and a rights-based focus on the most vulnerable—will be indispensable. Ultimately, scaling up affordable housing is not just a policy option; it is a moral and economic necessity for the nation's prosperity.
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