Canada Doesn't Need More Homes. It Needs the Right Homes in the Right Places.
Calls to "build more housing" have become the default response to Canada's housing challenges. While increasing supply is an important part of the conversation, many housing researchers argue that the issue is more complex than simply building as many homes as possible.
Canada already has housing that sits vacant, is held primarily as an investment, is used for short-term rentals, or has been allowed to deteriorate rather than return to the long-term housing market. At the same time, many communities continue to struggle with housing that is affordable, accessible, and located where people can easily reach jobs, schools, healthcare, and transit.
For that reason, many experts argue that Canada's housing challenge is not simply about supply, but about the type of housing being built, who owns it, where it is located, and whether it serves long-term community needs.
Researchers at the University of Toronto's School of Cities, through work completed as part of the Canada Mortgage and Housing Corporation's Housing Supply Challenge, argue that Canada's housing system has become a duopoly, producing mostly single-family subdivisions at one end of the market and high-rise towers at the other. Between those two extremes lies a wide range of housing that has become increasingly uncommon: duplexes, fourplexes, townhomes, courtyard apartments, and small walk-up buildings. Collectively, these forms are often referred to as the Missing Middle.
While the term "Missing Middle" is sometimes used in broader political debates about deregulation and development, at its core it simply describes housing forms that have historically existed in Canadian communities and can provide more housing choice without relying exclusively on towers or low-density suburban expansion.
What Does "Multi-Unit" Actually Mean?
"Multi-unit housing" covers several housing types that fit comfortably into existing communities.
It includes:
Accessory Dwelling Units (ADUs): basement apartments, garden suites, and laneway homes.
Multiplexes: duplexes, triplexes, fourplexes, and buildings with up to six homes.
Small apartment buildings: generally four to six storeys, designed to fit within existing neighbourhoods while avoiding many of the costs and complexities associated with high-rise construction.
These housing types can support families, seniors, first-time buyers, renters, and people looking to remain in their communities as their housing needs change. They can also be delivered by a wider range of organizations, including local builders, municipalities, non-profit housing providers, and community land trusts, rather than only large national developers.
Why Isn't More Missing Middle Housing Being Built?
The barriers extend well beyond zoning.
Researchers consistently identify lengthy approval processes, outdated regulations, financing challenges, labour shortages, and construction risk as significant obstacles. At the same time, many policy experts argue that new housing should be prioritized in locations where infrastructure and public services already exist, rather than encouraging continued outward expansion into previously unserviced areas.
Building in existing neighbourhoods can reduce pressure to extend expensive municipal infrastructure such as roads, water and sewer systems, schools, transit, and emergency services. It also supports more complete communities where residents can access daily needs without depending entirely on new suburban growth.
Development charges are part of this conversation as well. These fees exist to help municipalities recover the costs of providing infrastructure needed to support growth. However, charges are often structured similarly regardless of whether a project requires entirely new infrastructure or simply adds modest density within an already serviced neighbourhood. Many housing advocates argue that development charges should better reflect these differences while ensuring municipalities are provided with the resources and decision-making power and the resources needed to plan and support sustainable growth.
Financing Remains One of the Largest Barriers
For smaller builders and non-profit housing providers, financing is often one of the greatest obstacles long before construction begins.
Large developers frequently have access to significant equity from previous projects or substantial land holdings that can be leveraged to secure financing. Smaller builders, municipalities, community land trusts, and non-profit organizations often do not have those same advantages. They may have strong community partnerships, viable projects, and the expertise to deliver housing, but lack the upfront capital required to move a project through the earliest stages.
Before construction financing is available, housing providers often need to fund extensive pre-development work, including planning, engineering, environmental studies, design, feasibility assessments, community engagement, and approvals. These costs can represent a significant barrier, particularly for non-market housing providers whose projects are designed around community benefit rather than maximizing financial returns.
This is why many housing organizations and policy advocates are calling for new approaches to housing finance. Groups such as Make The Shift and the Coalition for Community Capital have highlighted the need for investment models that better support affordable, community-led, and non-market housing. Their work points to the importance of patient capital, early-stage funding, and financing tools designed around long-term community outcomes rather than short-term returns.
For non-profit and community-based housing providers especially, access to early pre-construction funding—through grants, recoverable grants, or other low-risk financing models—can determine whether a project moves forward at all. Providing support earlier in the process can help organizations explore viable projects, reduce financial risk, and bring more community-focused housing into reality.
Construction Risk Is Also a Housing Challenge
Even after financing is secured, construction risk can determine whether a project succeeds. Every schedule delay increases financing costs: weather interruptions, inspection delays, labour shortages, and material uncertainty all create additional financial pressure, especially for organizations working with limited budgets.
Reducing construction risk does more than improve project delivery. It increases confidence for lenders, improves cost certainty, and makes more projects financially viable.
Why Prefabrication Changes the Equation
This is where panelized construction can make a meaningful difference.
Rather than completing the entire building enclosure outdoors, much of the work is completed inside a controlled manufacturing environment.
That can provide:
Better quality control
Faster construction
More predictable schedules
Greater cost certainty
Fewer weather-related delays
For organizations operating with limited financing and narrow project margins, that predictability can significantly reduce project risk.
How SEED Building Systems Support Missing Middle Housing
Manufactured by Tooketree Passive Homes in Muskoka, SEED (Sustainable, Ecological, Efficient, Durable) wall, floor, and roof panels arrive on site insulated, air sealed, and CSA-certified before installation begins. Because the panels are engineered to Passive House performance levels, they support buildings up to six storeys, well suited to Missing Middle housing such as multiplexes and small apartment buildings.
Crews can often complete the building enclosure in days, reducing weather exposure, improving scheduling certainty, and helping projects move through construction with fewer delays. For municipalities, non-profit housing providers, community land trusts, and smaller developers working to deliver well-located housing, reducing construction risk can make an important difference.
Building Better Housing, Not Just More Housing
No building system can solve Canada's housing challenges on its own. Communities also need thoughtful planning, infrastructure investment, financing that supports smaller and non-market housing providers, approval processes that encourage appropriate infill, and policies that help deliver housing where services already exist.
Construction methods matter too. By reducing risk, shortening schedules, and improving predictability, prefabricated building systems can help make Missing Middle housing more achievable for the organizations working to build complete, resilient communities.
Canada's housing future depends not only on building more homes, but on building the right homes, in the right places, with the right financial and policy support to make them possible.