Why is housing so d*** expensive !?

Affordability of the basic need for a roof over our heads is always a concern but has become more so in the last few years where Canadians have experienced a marked increase in the cost to purchase a home. Reasons for this are discussed in this post.

1) Scarcity (for many urban markets).

  • Lack of supply is the single largest factor driving up home prices on urban markets.

Policies for municipal development that limit sprawl and encourage greater density have made land less available and the land that is available is more difficult to develop.

  • Urban settlement patterns - more people now living in cities has exacerbated the lack of supply.

NOTE: this issue makes both the land under the house more expensive, and the cost of the house itself (due to its scarcity and therefore desirability) higher.

It is also important to note that scarcity and expense to purchase a home means greater pressure on rental units. Over the past 20+ years, it seems property owners have been reluctant to develop multi-unit buildings expressly for rental due to a variety of market reasons, including the prevalence of rent-control, and the increase in zoning regulations and development fees by municipality's that discourage such projects.

Ontario’s urban municipalities tendency towards densification has created the unintended consequence of more expensive housing.

A recent study down by Ryerson university illustrates this effect.


This is a problem in many (most?) urban centres but note that for those who have the ability to be mobile and can either work from less urban locations or are simply retired, there are plenty of locations where demand is low, so prices are as well.

An extreme example, but here’s an article discussing properties available for $1 each !


2) Buildings and Development today are very different than even just 20 years ago.

a) Canada first created a National Building code in 1941, loosely adopted by provinces in the 20 years following. Ontario created its own provincial code in 1974. A home built 50 years ago may not have been subject to any code, and one built 25 years ago followed a code that resulted in a very different building than one built today.

As building science offers more knowledge and energy /environmental issues are necessary to address via improved building codes, this adds costs. The less tightly built, less insulated home with simple windows and medium efficiency furnaces and appliances were less expensive to build and....not even possible today.

Greater Ottawa Home Building Association (GOHBA) estimates $30K has been added over the past decade. This is set to rise yet more in 2019. New standards for roof trusses and minimum electrical panel standards (to allow every new home to support roof mounted PhotoVoltaic panels and electric car-chargers) are proposed in 2018 and will add $1500 to $3000 to the cost for every house, when they take affect.

b) More complex planning and regulation environment. Planning requirements that restrict grade changes, tree removals, protect certain animals, that dictate certain uses/shapes/formats, or mandate certain features, protests by neighboring property owners and neighboring communities and heritage preservation, are all now common hurdles. These planning issues were uncommon 25 years ago and unheard of 50 years ago. As important or necessary as some of them may be, they add to the cost of creating homes.

Another built-in cost to this complexity - it requires expertise and considerable documentation. That provides designers like myself with valuable work but it unquestionably adds cost. An example of that is the following illustrations, perhaps a bit extreme as the “before” example is nearly 100 years old but it illustrates the point.

Documents you needed to build a house in 1925:

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What you need to build a house (in Ontario) in 2018:

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Shown is only 4 of a 13 page Architectural Set. Also required is :

Engineered Set consisting of a certified Site Grading Plan, Floor and Roof Truss plans and Structural specifications for Posts/Beams within the Building.

HVAC set showing heating/cooling appliance types and spec’s and compliance / compatibility with wall, roof, foundation specs and the mandated Energy Efficiency portion of the Building Code (SB-12).

Depending on the location and zoning regulations governing the project site, a Significant Tree Removal Study, Dangerous Materials and Rehabilitation Study, Streetscape Analysis Study, and a Sun/Shade Study may also be required before a Building Permit can be issued.

The above is an Ontario example and the requirements will differ in other areas of Canada but unless its a remote area, not greatly so.

3) Policy versus Practicality.

Contributing to the reduction in affordability is the recent tendency for Governments (federal and provincial) to use the building code as policy vehicle instead of a technical one. For the 2019 Ontario Code, Ontario government has proposed that all new homes have:

  • roof trusses capable of supporting Photovoltaic cells. ($500-$1000)*

  • a 200 Amp service (instead of 100Amp) to ensure allowance for install of Electric Vehicle charging stations, in the case of singles and townhomes. ($500-$1500)*

* cost per dwelling as estimated by Greater Ottawa Home Builders’ Association. Range is dependent on design and location of building.

These policy ideas seem to add uneccessary cost to all homes. For instance, currently, less than 1% of the Ontario population drives Plug-in Electric Vehicles.

According to ieso.ca 26,000 microFit contracts for the install of Photovoltaic panels were awarded between 2009 to 2017, when the program was closed. Conservatively assuming a 7 year operation given that the program needed to gear up, that is an annualized basis of 3714 contracts per year of which I will assume 50% were put on roofs instead of on pedestals or stand-alone in fields and yards (there is no data on this that could be found).

CMHC statistics show that Ontario generally builds about 73,900 new dwelling units per year of which the information reveals 65% are singles, semi-detached or row homes of the type that could put photovoltaic panels on the roof.

Meaning of 48,045 dwellings built per year, 3,714 (7.7%) put panels on the roof.

Both the above behaviors will undoubtably grow but given that the current need is so low, its seems far more reasonable that new homes only be built with those features when required by customers (or perhaps as an added feature chosen by builders in order to market their homes versus competitors) instead of 100% of the time to the detriment of affordability to all Ontarions.

4) Taxes versus affordability.

Development Fees charged by municipalities, land transfer taxes levied by provincial governments, and HST all add to the cost of homes in Canada. Despite recognizing that affordability is an issue for many Canadians, so far, no tax relief has been proposed by the various govenrments who recieve fees and taxes as part of the creation and transaction of housing.

Depending on the source, the price of a home in Canada includes 20 - 25% taxes and fees.




All of the above four issues have an affect on the price of homes in Canada. However, it is my observation that a concerted effort on behalf of provincial and municipal governments to increase land availability, and reduce regulatory and development costs would have the largest effect of improving affordability.

Even simple things can make a difference. Revising zoning regulations to allow more or smaller dwelling units or lane homes and tiny homes. Many municipality's regulations disallow these housing forms. Coach houses are also currently required to meet such setback and size regulations that make them restricted to very few property's and no less expensive to build and offer for occupancy than a regular house.

Regulators are also in the position to incent developers and builders by offering to reduce regulatory and development fees and to operate the management of multi-unit low-cost rentals for those families in need, but few municipal or provincial agencies are willing to do so.

Property owners, quite naturally, seek to make the most profitable use of their valuable asset. It is not reasonable to expect them to do differently. If there is a social need to add more rentals or more affordable dwellings within a municipality because it serves a public need, it falls on government to either 1) create a regulatory and financial environment that allows the private market to do accomplish it or 2) take on the task of creating / operating these affordable dwellings themselves.

The link below is an article that discusses how current regulations in the GTA dissuade builders from constructing town-homes. THis small change is simply an example of an action that would be an efficient way to create more homes in a desirable format and would be a positive step to improving supply and hence improving affordability.


That alone won’t solve the problem but it illustrates the influential power that governments can wield to address the issue.

That’s my two cents ! Happy designing and Happy building all ! - Renzo