Why 2026 Could Be a Watershed Year for Affordable Housing in Canada
For Canadians struggling to find a permanent place to live or dreaming of homeownership while renting, the year 2026 is emerging as a beacon of cautious optimism. A confluence of federal initiatives, expert advocacy, and innovative construction approaches suggests a potential turning point in addressing the nation's housing affordability crisis.
Federal Catalyst: The Build Canada Homes Agency
In a significant move last fall, Prime Minister Carney announced the launch of Build Canada Homes, a new federal agency with a clear mandate: to enable the construction of more affordable housing at scale. Backed by an initial funding commitment of $13 billion, the agency aims to propel larger housing projects forward. Its strategy is threefold: sourcing viable land, attracting private capital investment, and providing incentives for builders.
Simultaneously, the initiative pledges to support the domestic construction industry by prioritizing Canadian-produced materials like lumber, steel, and aluminum. To address the critical issue of land availability, the federal government's Public Lands for Home Plan proposes, at least in theory, utilizing underused federal assets. This could involve building homes on properties owned by Canada Post, National Defence, or converting vacant federal office spaces into residential units.
Reducing Red Tape and Embracing Density
Beyond funding, industry leaders emphasize the need for regulatory reform. Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), argues for a reduction in the "red tape and bureaucracy around development approvals." He stresses that it is equally important to "allow more density in our cities."
This call for intelligent densification was echoed at the recent Canadian Urban Institute (Canurb) Summit in Ottawa. David Miller, former Mayor of Toronto and now Managing Director with C40 Cities, lent his support for creating more livable communities. "We need to create places Canadians want to live, that are more walkable and have better public transit," Miller stated. He further emphasized that for communities to thrive, they require "the right amount of housing and the right type of housing. Even in cities where there is an oversupply… it’s not always the right supply."
Innovative Construction and 'Missing Middle' Solutions
The path to affordability also lies in rethinking how and where we build. Architectural firm Norr highlights office-to-residential conversion projects as a potential solution with dual benefits: meeting critical housing needs while revitalizing dormant commercial districts and downtown cores.
Another promising avenue is addressing the "missing middle"—housing types like duplexes, townhouses, and low-rise apartments that bridge the gap between single-family homes and high-rise towers. Toronto's Expanding Housing Options in Neighbourhoods initiative promotes "soft densification" through options like:
- Laneway suites: Self-contained units built on the same lot as an existing home, often in rear laneways.
- Garden suites: Independent living units created within existing ancillary buildings, such as detached garages.
A 2024 report by the Canada Mortgage and Housing Corporation (CMHC) underscores the growing need for "innovative and scalable construction methods." Two methods gaining traction are:
- Prefabricated and Modular Construction: This factory-based process is more efficient than traditional on-site building, leading to less material waste and reduced labour requirements. The CMHC notes that many prefabricated units are built to high energy standards, which can lower long-term utility costs for residents.
- Mass Timber Construction: As reported by ReNew Canada, this sustainable method is being used for affordable projects. A landmark example is a six-story, 42-unit affordable housing building that opened in Hamilton last year. It is North America's first affordable housing project to combine Canadian-sourced mass timber with Passive House certification, ensuring superior energy efficiency and comfort for residents.
Matt Bolen, a spokesperson for mcCallumSather, the firm behind the Hamilton project, calls it "proof that affordable housing can be delivered quickly, responsibly and with a high standard of livability."
The Road Ahead for 2026 and Beyond
The collective hope among advocates is that successful projects like Hamilton's will become the norm rather than the exception in 2026 and the years that follow. Achieving this objective will likely depend on sustained improvements in three key areas: financing projects effectively, creatively sourcing land, and embracing efficient, innovative construction techniques. The coming year may well prove to be the pivotal moment when these strategies converge to make a tangible difference in the Canadian housing landscape.
