Explore potential solutions to the housing affordability crisis, including innovative shared equity models

Housing affordability in Canada is at crisis levels, especially in BC and Ontario. With prices out of reach for all but the very wealthy, and a significant shortage of middle-class housing, more and more Canadians are struggling to find homes they can afford. According to the 2021 Census, Canada’s homeownership rate fell to 66.5 per cent, its lowest in two decades. It’s particularly bad in BC and Ontario, which continue to be Canada’s least affordable markets.

With a growing housing supply gap and financial pressures pushing many to either rent indefinitely or move to more affordable cities, it’s past time for more decisive action. The housing affordability crisis isn’t just an economic issue but one that touches all aspects of society. The shortage of middle-class housing options requires a combination of planning, government intervention, and new, innovative models of homeownership.

According to the Canada Mortgage and Housing Corporation (CMHC)’s new Supply Gaps Estimate report, Canada will need to build an additional 3.5 million housing units beyond current trends by 2030 to restore affordability across the country. That hardly seems realistic, but that’s a big part of the point – so much of the housing situation can be described as “unrealistic”. BC and Ontario account for the lion’s share of this supply gap, with the rapid increase in home prices leaving many young people with no choice but to stay with their parents. It’s unrealistic to get into the housing market and begin to build any real equity.

Adam Gant, a Victoria-based advocate for a shared equity model of housing, has urged the provincial and federal governments to focus on the need for more entry-level and middle-class housing. “Creating affordable entry points for Canadians to get into the market within their means is crucial. Homeownership is not only about shelter but also the opportunity to build wealth. That’s a surefire way to eventually afford the home you want in the city or neighbourhood you want.”

Every campaign season is dominated by proposed solutions to the housing crisis. In BC and Ontario, provincial governments have attempted to make good on their campaign proposals through a series of legislative actions focused on increasing the housing supply. Ontario’s plan promises to build 3.87 million new homes by 2031. Similarly, BC’s “Homes for People” action plan aims to build more small-scale, multi-unit housing options like townhomes, triplexes, and laneway homes.

BC Premier David Eby acknowledged the limitations of the current housing market, saying, “Constructing mostly high-rise condo towers or single-family homes means B.C. isn’t building enough small-scale multi-unit homes that fit into existing neighborhoods and give people more housing options that are within reach.” He emphasized the importance of fixing outdated zoning rules that have slowed the delivery of much-needed housing.

The legislative changes attempt to tackle the core challenges of developing more middle-class housing, such as restrictive zoning regulations and complicated, lengthy approval processes. By streamlining these processes and encouraging the construction of smaller, more affordable housing units in established neighborhoods, governments hope to create more options for middle-income earners.

The Shared Equity Model: A Path Forward?

While zoning reforms and new legislation are crucial steps, innovative homeownership models such as shared equity housing are increasingly being considered as a means to make homeownership “realistic” for so many who don’t qualify for a mortgage. Shared equity housing allows buyers to purchase a portion of a home along with investors, while a housing organization or government retains ownership of the rest, reducing the initial financial burden for homeowners. As homeowners build equity over time, they have the option to purchase additional shares of the property, gradually increasing their ownership stake.

“Shared equity programs provide a pathway for Canadians to get into the market without the prohibitive upfront costs,” says Gant. “It’s a stepping stone that allows people to start building equity, especially in markets as expensive as BC and Ontario. This model puts homeownership within reach, even as housing prices continue to rise.”

Shared equity programs not only reduce the financial strain on buyers but also help stabilize housing markets by offering long-term affordability. They are particularly well-suited to middle-class families, who may not qualify for social housing programs but are also priced out of traditional homeownership options in urban centers.

For a realistic shot at widespread middle-class homeownership, there has to be a significant shift in how housing is built, where it’s located, and who it’s designed for. The push for compact housing units in dense urban areas, for example, addresses the need for more efficient land use and a focus on affordability over luxury. Increased cohabitation, communal living, and longer commuting distances are symptoms of the crisis and will likely remain as temporary ”solutions” to an out-of-reach market for the middle class.

Alternative models like shared equity housing offer more sustainable solutions to housing affordability, giving future generations a real shot at building wealth through homeownership.

As Gant puts it, “The need for more housing isn’t just about supply and demand; it’s about giving Canadians the opportunity to own a piece of their future.”

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