The 500,000-Home Myth: Why Canada’s Biggest Housing Target Is Misleading

Canada's housing crisis is about affordability, not just housing starts.

Canada’s housing debate has been fixated on one number: 500,000 homes a year. But what if that’s the wrong target?

Mike Moffatt and Sabrina Maddeaux break down why Canada’s housing goals should reflect today’s slower population growth, why what we build matters more than raw housing starts, and how smarter policies on affordability, immigration, and family-sized homes could solve the housing crisis faster than many think.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Sabrina Maddeaux: During the 2025 election, the federal Liberal Party made a campaign promise that they would double Canada’s current rate of residential construction over the next decade to reach 500,000 homes per year. So far, it’s not going well. Housing starts have been stuck at the 250,000 level, and the Canada Mortgage and Housing Corporation forecasts that starts will actually fall each of the next three years.

Analysts have questioned whether or not that rate of homebuilding is even possible. But now, with Canada’s population growth slowing and the aging of the baby boomers, analysts are also questioning whether or not building a half million homes each year is even necessary. Mike, you are one of those analysts, and you’ve done a lot of research on housing targets. Does Canada really need to build 500,000 homes a year?

Mike Moffatt: Short answer: No.

Back when Canada’s population was growing by a million people per year, we would have to build that many homes —or actually even more than that — just to keep pace. But since the federal government has reduced immigration targets, it’s scaling back on the number of non-permanent residents in Canada; half a million a year is, frankly, overkill.

Sabrina Maddeaux: That’s interesting. So I’m curious where the Liberal Party got their 500,000 target to begin with. Did it just sound like a good number, or were they basing this on prior immigration targets?

Mike Moffatt: So we can’t pin this one on the Liberals, or at least not totally. The targets themselves come from the CMHC, specifically from a series of reports examining housing shortages. Their June 2025 report estimated that Canada needed to hit around 430,000 to 480,000 housing starts a year to restore affordability. So, in line with the Liberal promise.

And these are really solid reports. I would say their methodology on how they arrive at that figure is a bit opaque. I’d like to see a little bit more transparency in their model, but it’s a good report. And the thing I really like about it is that it recognizes the link between housing supply and affordability. So their estimate on the size of housing shortages or how many houses you need each year is a function of the overall level of affordability you’re trying to target. If you want to get deep affordability, you have to build more homes. If you’re less ambitious, you build fewer homes.

Though all of this housing starts discussion makes me believe that governments, and not just the federal government, are overfocused on the wrong targets because the general public doesn’t care about how many housing starts there are. They care about whether or not they can afford a home. So I think governments might be better off focusing on metrics that the general public can relate to.

In your mind, what would the housing market look like if the middle-class housing crisis were over? And what data would you be looking at?

Sabrina Maddeaux: The public cares about whether they can afford rent or a home that they want to raise a family in. So the government ultimately should be focused more on metrics that show whether that is possible.

Now, I think housing starts— they feel that’s something they can control. It’s an easy metric, and it’s less complicated than talking about other areas of supply and demand, like immigration. But really, the government should be focused on things like price-to-income ratios, the proportion of young people still living at home with their parents, homeownership rates, and also whether the housing supply is properly allocated in terms of the number of people living in a home versus the number of bedrooms. Can seniors downsize if they want to in their own communities?

All of the stats related to those things probably aren’t looking too good and are much less favourable to governments and are going to be harder to fix long-term. So I can see why they would just like to go with starts. And starts is also a number that they seem to constantly manipulate. What does that mean? Are those single detached homes? Is it just any unit? Is it dorms as well as those long-term care homes? So I think that’s why a lot of governments turn to starts as an easy indicator to point to.

Mike Moffatt: I think you’re right. And I think the fact that it does obscure what’s going on may actually be a benefit to governments. Because if you focus on price, then you raise questions like, “Do you want my existing home price to go down?” or a metric like a price-to-income ratio still invites those questions.

So I get what governments are doing with housing starts. It’s a bit easier to measure. They’ve got an existing methodology. It’s not as controversial. But at the same time, I do think we would be a little bit better off if governments had a little bit more transparency on exactly what they were trying to accomplish.

Sabrina Maddeaux: Starts are obviously focusing on the supply side of the issue, where there’s also the demand side, which has really gone off the rails due to unsustainable immigration targets in recent years. So these targets we’re talking about for starts do assume that the population is going to grow at a certain rate. But we have seen a lot of the pressure taken off the housing market through reductions in immigration.

My view is that there needs to be further reductions. Do you think [the changes they’ve made] is enough to fix it over time?

Mike Moffatt: It certainly has taken the pressure off. And the federal government admits that itself. They said so outright in the last budget. But once the reductions in non-permanent residents are fully phased in a couple of years from now, Canada’s population is set to grow between about 300,000 and 400,000 people a year.

Just do the math on that. You don’t need to be building 500,000 homes a year in a country whose population is growing by 300,000 to 400,000. You don’t need two homes for one person.

You do need to build some. The amount isn’t zero if you’re growing that much. And we still have a large pre-existing housing shortage to account for. So you need to build quite a few homes, but it’s certainly taking a lot of the pressure off.

Sabrina Maddeaux: It’s that pre-existing shortage I’m very much concerned about because even if the immigration targets are brought down over the next couple of years, we had such unsustainable explosions in numbers over the last five years, in particular, even ten years, that we have a lot of catching up to do. And then when we talk about starts, what types of starts?

I’m also concerned that long-term, the government hasn’t really bought into the idea that immigration policy needs to be sustainable and matched to housing targets and health care capacity and infrastructure, and that this is a quick patch over the next couple of years, and then we’ll just go back to where we were before.

Mike Moffatt: That is a real risk. And housing needs are highly dependent on immigration policy assumptions. If the population growth rate changes, so too do future housing needs

Apartment developers, for example, are in one of two camps. You’ve got one camp saying, “We’ve built a lot of apartments. We don’t really need any more; we’re scaling back. We’re going to be investing in other stuff - government bonds or whatever.” And then you’ve got some who are saying, “No, no, we’re going to keep building. We think the country needs more.”

And I find the one thing that divides those two camps is their assumptions about the future path of immigration.

The developers who are continuing to build are making the same bet that you’ve discussed, where they’re saying, “We don’t think it’s politically sustainable to have immigration rates this low. We think governments are going to turn the taps back on for economic reasons, because the business community is going to want more labour and so on. So we’re making a bet that immigration is going to go up, and we want to have the units there to account for that increased demand.”

So it is really funny how the industry fully recognizes that really what they’re betting on is the future path of immigration policy more than anything else.

Sabrina Maddeaux: That’s really interesting. And that’s why I think immigration will continue to be a top-three issue when they’re polling the public over the next few years, because there’s going to be a lot of pressure on both sides. And I think that politicians, in general, have trouble making hard choices. And immigration reductions are, by nature, very difficult choices. And especially in the federal Liberal Party, which obviously now has a majority over the next two years -they’ve traditionally been very pro-large-scale immigration, and there’s going to be a lot of ideological pressure from within to return to that.

Mike Moffatt: I do think it is probably the number one issue worth watching, because as you recognize, it affects the demand and supply of everything. And there is a lot of uncertainty there.

Now, when we go to housing, we can talk about the number of people and the number of homes, but you’ve also mentioned a couple of times that what we build also matters. For example, high-rise apartment units house roughly half as many people as ground-oriented homes, like townhouses. High-rise apartments, you tend to be talking about one, maybe two bedrooms. Townhomes tend to be three or four bedrooms. So our housing targets and housing starts data are a bit misleading, because it treats all units the same; it treats those one-, two-, and studio high-rise apartment units, they all count as a start, the same as a three- or four-bedroom townhome. That’s also a start.

And because over the last 20 years, Canada has shifted from building mostly ground-oriented housing, like those townhomes and single detached and so on, to mostly high-rise apartments, the types of units have changed and the amount that each unit can house has changed. None of that is to suggest that building high-rises is bad. We need lots of it. But it does mean that building five high-rise units doesn’t have the same impact on the housing crisis as five townhomes. If we’re going to be relying on high-rises to fill some of this housing shortage, we need to be building closer to ten of them to have the same relative impact as building five townhomes. And our data doesn’t really capture that.

Sabrina Maddeaux: And if we are building high-rises, then they need to have livable units with good layouts, with more bedrooms as well, because the real shortage is the shortage of family-sized homes. That can be in high-rises, and it can be townhomes, but single detached is really what a lot of people envision when they want to raise a family. And there is still such a shortage of those. And certainly anything that resembles affordability near a major economic centre. So with that in mind, how many homes do we actually need to be building each year?

Mike Moffatt: It does obviously depend on the types of homes, but at current immigration rates, it’s somewhere in the 200,000 to 300,000 a year range, which is much more manageable. It also depends on how aggressively we want to close the affordability gap, because we do have a big pre-existing shortage. So if we want to hit affordability targets sooner, we’re probably looking more at the 350,000 range or so. If we want to scale back and take our time about it, then we’re probably closer to 250,000 — again, noting that what we build matters, and it matters a lot.

But regardless of the type of homes, they’re not just going to happen. Those homes won’t get built if people can’t afford to buy or rent them. It’s just simple economics. So Canadian governments need to do a lot more to get the cost of delivery and construction down. And that includes everything from land costs to approval costs, taxes, and fees like development charges and HST.

But I would say that all of this is solvable within the next decade. We don’t need to hit 500,000 housing starts a year unless we have some big changes to immigration policies. So I think if governments are willing to make some tough decisions on issues such as taxes and land use policy and how infrastructure is funded, I think we can get to middle-class affordability within the next decade or so.

Sabrina Maddeaux: That’s a big statement to underline: that if immigration stays lower — at current levels — we don’t really need those 500,000 housing starts a year.

Mike Moffatt: And that’s a good thing because Canada’s never even hit 300,000 housing starts a year.

Now, I do think half a million a year would be possible with some rather radical government reforms on land use, zoning and so on. Reforms that they haven’t really shown much of a willingness to do. And half a million a year could be needed if we decide to aggressively increase population growth and immigration. But at the end of the day, your country’s only growing by 300,000 people a year; you don’t need to be building 500,000 homes a year, even if you’re dealing with a pre-existing shortage. Eventually, those homes catch up with population growth and do so pretty quickly.

Sabrina Maddeaux: And our demographics also are working in our favour here, as baby boomers will inevitably be turning over a lot of those larger suburban homes over the next 20 years.

Mike Moffatt: That’s absolutely true, though we have to note that those suburban homes have actually traditionally been very popular with newcomers to Canada, along with first-generation Canadians. So, yes, a lot of them will be turning over, but many of them will be inherited by family members, and others, I think there will be a fair bit of demand for those homes, particularly from relatively new Canadians.

Sabrina Maddeaux: So at the end of the day, what we build really matters. And all of these housing start targets from federal and provincial targets, they all seem to miss out on that nuance. So we need a mix of housing types. And simply building half a million shoebox condos isn’t going to cut it.

Mike Moffatt: Exactly. If we had much more nuanced targets, if we focused more on the cost of delivery rather than the number of housing starts, we could end this crisis much faster. And we certainly wouldn’t have to wait until the year 2060, as the Federal Housing Advocate suggests.

Sabrina Maddeaux: We definitely do not want to wait until 2060 for affordability. I think people will be in the streets well before that. It can’t just be about numbers. Quality of life is important. And matching homes to what people want and need to live in.

So our goal shouldn’t be just to warehouse people, but rather to create strong communities where kids can go outdoors and aren’t trapped in tiny rooms doomscrolling on their phones.

Thank you, everyone, for watching and listening. And to our producer Meredith Martin and our editor, Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about being trapped in a small room, doomscrolling on your phone, please send us an email to [email protected].

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative