The Missing Middle of the Rental Market Is Fueling Canada’s Homelessness Crisis
Every housing strategy I have studied eventually comes back to the same question: who is the supply actually for? A new national analysis from the Canadian Alliance to End Homelessness answers that question in stark terms. It is not overall housing scarcity driving Canada’s homelessness surge. It is the specific collapse of the cheapest slice of the rental market, the units that used to function as the floor beneath the housing system.
The CAEH compared point-in-time homelessness counts from 36 communities across 2018, 2022, and 2024 against CMHC rental market data, isolating the cost and vacancy trends in the cheapest quarter of rental units. The pattern held everywhere. In Hamilton, the homelessness rate more than tripled, from 5.94 to 19.2 per 10,000 people, while the cheapest one-bedroom units climbed from $815 to $1,200 a month and vacancy in that segment shrank from 2.3 per cent to 1.2 per cent. Cities like Toronto and Kelowna, where low-end rental affordability is most strained, posted the highest homelessness rates in the country.
As a development strategist, what strikes me most is the finding that new supply has still not reached the people who need it. Canada has added rental units in recent years, but nearly all of that growth has landed at the upper end of the market. That is a predictable outcome of land economics. Land costs, construction costs, and financing terms push new projects toward higher rents to make the numbers work, and without deliberate intervention, the low end of the market simply does not get replenished. It erodes instead, unit by unit, as older affordable stock is renovated, converted, or priced out of reach.
Homelessness is not just a housing problem, but it is always a housing problem.
That line from CAEH chief executive Tim Richter should be read by every municipal planning department and provincial housing ministry in the country. It reframes homelessness away from a social services challenge and toward a land use and supply challenge, one that development strategy is directly equipped to address. Mr. Richter is calling on the next iteration of Canada’s National Housing Strategy to prioritize the lowest-income Canadians, slow the loss of existing affordable stock, and double the supply of low-end rentals. Those are not abstract policy goals. They are project-level decisions about zoning permissions, incentive structures, and where public land gets allocated.
This is where coordinated development planning matters most. Municipalities that build inclusionary zoning, density bonuses tied to affordability, and non-market housing targets directly into their growth plans are the ones with a real chance of bending this curve. Waiting for market-rate supply to eventually trickle down, as this research and earlier American research from Gregg Colburn and Clayton Page Aldern both show, does not work on its own. The affordability gap at the bottom of the rental market needs to be built for on purpose, at scale, with every level of government aligned. Cities that treat this as core infrastructure planning, not an afterthought, will be the ones that keep their most vulnerable residents housed as they grow.
Source: The Globe and Mail
