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Ontario Will Miss 1.5 Million Homes by 2031 Without Zoning and Code Reform
Regulatory barriers, not developer interest, are the primary obstacle keeping housing supply constrained. A formal call from industry groups this past year carried a blunt message: without structural changes to zoning and building codes, the country will fall thousands of units short every year through the end of the decade.
The arithmetic is unforgiving
Housing targets set in 2022 aimed for 1.5 million new homes by 2031. That requires roughly 150,000 starts annually. Recent years have fallen short: 1977 saw roughly 89,000 starts, 2024 roughly 75,000, and 2025 approximately 65,000. The gap compounds. A shortfall of 50,000 units one year doesn't disappear when the next year hits its target, it accumulates. By 2026, the country is tracking significantly behind the pace required. Industry analysis argues that what developers are allowed to build, and where, is the binding constraint, while tightening monetary policy and labour shortages, though real, are secondary obstacles.
Single-stair designs and the mid-rise opportunity
One of the primary recommendations is allowing single-exit stairwell designs for buildings up to six storeys. Current regulations require two exit stairwells for most mid-rise structures, which reduces the amount of usable floor space on small urban lots. A building with two staircases dedicated to egress cannot fit as many units, or as much rentable square footage, on a narrow parcel as a building with one.
Seattle adopted single-stair rules in 1977, allowing apartment buildings of up to six storeys to be served by a single exit stair. Parts of Europe have used them for decades, relying on modern sprinkler systems and non-combustible materials to maintain safety. The position is that the old two-stairwell standard is a relic from an era before those technologies became standard, and that it now functions primarily as a cost barrier that makes projects financially unviable.
The counterargument from fire safety officials is that evacuation and firefighter access are materially harder in a single-stair building during an emergency. That debate is unresolved, but the industry framing treats it as settled: the safety trade-off, in their view, is minimal, and the housing cost is large.
Exclusionary zoning and the missing middle
The other structural barrier identified is exclusionary zoning, municipal rules that reserve large residential areas exclusively for single-family detached homes. These zones prevent the construction of townhomes, triplexes, and small walk-up apartments, the housing types that planners call the "missing middle."
When a city designates 70% of its residential land for single-family use, the remaining 30% absorbs all the density. That pushes developers toward high-rise construction on the few parcels where it's allowed, which is more expensive per unit and slower to approve. The alternative, allowing duplexes, triplexes, and small apartments on ordinary residential streets, requires changing zoning bylaws city by city, or overriding them at the provincial level.
Recent legislation passed in 2022 reduced some development charges and streamlined approvals. Industry groups are calling for a second wave of reform that fundamentally alters what can be built on most residential land.
What this means for land values and financing
If zoning opens up, single-family lots in transit-served neighbourhoods become redevelopment candidates. A property's value can increase materially when rezoned to allow multifamily development, particularly for parcels near transit. For wealthy landowners near transit stations, that's a wealth event. For municipalities, it's a revenue problem, services have to scale with population, and development charges were just cut.
The other variable is interest rates. Developers finance projects based on pro-forma models that assume a certain cost of borrowing. At 5.5% construction financing, many projects pencil. At 7%, fewer do. Regulatory reform widens the range of viable projects at any given rate, but interest costs still determine whether borderline deals close. The argument is that policymakers cannot wait for rates to fall. The gap is too large, and the time window is too short. Without structural regulatory change, the country will miss its targets by hundreds of thousands of units, regardless of what central banks do next.
Regulatory barriers, not developer interest, are the primary obstacle keeping housing supply constrained. A formal call from industry groups this past year carried a blunt message: without structural changes to zoning and building codes, the country will fall thousands of units short every year through the end of the decade.
The arithmetic is unforgiving
Housing targets set in 2022 aimed for 1.5 million new homes by 2031. That requires roughly 150,000 starts annually. Recent years have fallen short: 1977 saw roughly 89,000 starts, 2024 roughly 75,000, and 2025 approximately 65,000. The gap compounds. A shortfall of 50,000 units one year doesn't disappear when the next year hits its target, it accumulates. By 2026, the country is tracking significantly behind the pace required. Industry analysis argues that what developers are allowed to build, and where, is the binding constraint, while tightening monetary policy and labour shortages, though real, are secondary obstacles.
Single-stair designs and the mid-rise opportunity
One of the primary recommendations is allowing single-exit stairwell designs for buildings up to six storeys. Current regulations require two exit stairwells for most mid-rise structures, which reduces the amount of usable floor space on small urban lots. A building with two staircases dedicated to egress cannot fit as many units, or as much rentable square footage, on a narrow parcel as a building with one.
Seattle adopted single-stair rules in 1977, allowing apartment buildings of up to six storeys to be served by a single exit stair. Parts of Europe have used them for decades, relying on modern sprinkler systems and non-combustible materials to maintain safety. The position is that the old two-stairwell standard is a relic from an era before those technologies became standard, and that it now functions primarily as a cost barrier that makes projects financially unviable.
The counterargument from fire safety officials is that evacuation and firefighter access are materially harder in a single-stair building during an emergency. That debate is unresolved, but the industry framing treats it as settled: the safety trade-off, in their view, is minimal, and the housing cost is large.
Exclusionary zoning and the missing middle
The other structural barrier identified is exclusionary zoning, municipal rules that reserve large residential areas exclusively for single-family detached homes. These zones prevent the construction of townhomes, triplexes, and small walk-up apartments, the housing types that planners call the "missing middle."
When a city designates 70% of its residential land for single-family use, the remaining 30% absorbs all the density. That pushes developers toward high-rise construction on the few parcels where it's allowed, which is more expensive per unit and slower to approve. The alternative, allowing duplexes, triplexes, and small apartments on ordinary residential streets, requires changing zoning bylaws city by city, or overriding them at the provincial level.
Recent legislation passed in 2022 reduced some development charges and streamlined approvals. Industry groups are calling for a second wave of reform that fundamentally alters what can be built on most residential land.
What this means for land values and financing
If zoning opens up, single-family lots in transit-served neighbourhoods become redevelopment candidates. A property's value can increase materially when rezoned to allow multifamily development, particularly for parcels near transit. For wealthy landowners near transit stations, that's a wealth event. For municipalities, it's a revenue problem, services have to scale with population, and development charges were just cut.
The other variable is interest rates. Developers finance projects based on pro-forma models that assume a certain cost of borrowing. At 5.5% construction financing, many projects pencil. At 7%, fewer do. Regulatory reform widens the range of viable projects at any given rate, but interest costs still determine whether borderline deals close. The argument is that policymakers cannot wait for rates to fall. The gap is too large, and the time window is too short. Without structural regulatory change, the country will miss its targets by hundreds of thousands of units, regardless of what central banks do next.
Sources
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