Quick Answer
More housing supply is part of the solution to Canada’s affordability problem, but supply alone is not expected to fix it quickly. In 2025, national housing starts rose about 6% to roughly 259,000 units, led by record rental construction and growing “missing middle” housing such as duplexes, townhouses and low-rise apartments. Ownership-focused supply actually weakened over the same period, as condo presales collapsed and unsold inventory climbed. Most housing economists agree that added supply tends to ease prices and rents gradually over years rather than months, and works best alongside other levers like interest rates, taxes and demand policy. For buyers, that means affordability may improve slowly, making preparation, not waiting, the smarter strategy.
The supply promise everyone keeps hearing
You have probably heard the pitch: build more homes, and prices come down. After years of rising costs, plenty of Canadians have quietly stopped believing it.
The fatigue is fair. We keep reading about new construction, yet the home you want still feels out of reach. So here is a straight answer instead of a slogan: more supply matters, but it is only one piece of a bigger picture, and the type of housing being built changes who it actually helps.
This guide explains what shifted in 2025, what “missing middle” housing really means, and what all of it means for you. For more on why the raw numbers can mislead, see our look at the hidden housing crisis in Canada.
Quick start: pick your path
Find yourself below, then skip to the parts that matter most for you.
Whatever your path, the smartest first move is the same: know your numbers before you shop. A few minutes with an instant pre-approval certificate shows what you can actually borrow today.
What “missing middle” housing actually means
Direct answer: Missing middle housing means medium-density homes that sit between single-family houses and high-rise towers. It includes duplexes, triplexes, fourplexes, row houses, stacked townhouses, low-rise apartments, and secondary or laneway suites. These homes were once common but largely vanished from new construction.
The name describes a gap. For roughly 60 years, most Canadian neighbourhoods allowed only detached houses or, in select areas, tall apartment buildings. Everything in between slowly went missing.
That gap matters because those middle options are often more attainable than a detached home and roomier than a small condo, suiting families, downsizers and renters caught between the two extremes.
You will also see the phrase “housing starts” throughout this article. A housing start is simply a new home where construction has begun, counted from the moment the foundation is laid.
If a term ever trips you up, our plain-English mortgage terms glossary breaks the jargon down.
What changed in 2025: more homes, but not the kind buyers want
Direct answer: In 2025, Canada’s housing starts rose about 6% to roughly 259,000 units, according to CMHC’s Spring 2026 Housing Supply Report. The growth was driven largely by record rental construction and more missing middle housing, while supply aimed at buyers weakened.
On the surface, that is good news: more homes broke ground than the year before, beating the ten-year average in nearly every major market.
Look closer and the picture splits in two. Rental apartments under construction reached almost twice the ten-year average, with record starts in cities such as Calgary, Edmonton and Montréal. Missing middle building also grew, rising roughly 10% across the seven largest metro areas.
Ownership housing moved the other way. Condominium presales collapsed, unsold inventory climbed, and tighter financing pushed some projects into delays, cancellations or conversion to rentals.
The Canada Mortgage and Housing Corporation (CMHC), the federal agency that tracks and insures housing, warned that this thinning pipeline could limit future homes for buyers right as demand recovers.
Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479
For a fuller read on where things are heading, see Canada Housing Market 2026: A New Phase Begins.
Missing middle vs. condos vs. single-family: how the choices compare
Direct answer: Missing middle homes typically cost less than detached houses and offer more space than condos, and they can often be built faster because many no longer require rezoning. Single-family homes offer the most space at the highest price; condos are cheapest to enter but smallest.
| Home type | Typical cost | Space | Build speed | Best suited for |
|---|---|---|---|---|
| Single-family detached | Highest | Most, with land | Slowest | Families wanting room and a yard |
| Missing middle (duplex–fourplex, townhouse) | Mid-range | Moderate, often ground-level | Often faster; frequently no rezoning | Downsizers and first-timers priced out of detached |
| High-rise condo | Lowest entry | Smallest | Varies; large towers slow | Singles, couples and urban buyers |
Where missing middle homes get built varies widely. In Calgary, roughly six of every ten new starts in 2025 were missing middle, while Toronto posted the lowest building rate per person of the seven largest metros despite a near-half share.
Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479
Before you set your heart on one type, know your real budget. Our mortgage affordability calculator gives a quick, honest figure to work from.
Will more supply actually lower prices? The honest answer
Direct answer: More supply can ease prices and rents, but it typically does so gradually over years rather than months. Canada needs millions of additional homes to close its affordability gap, and supply works best alongside other forces such as interest rates, taxes and the pace of population growth.
The math is humbling. CMHC has estimated that restoring affordability could require millions of additional homes by 2030. At today’s pace, closing that gap takes time.
Supply also competes with demand. Population growth, investor activity and borrowing costs push from the other direction, so even strong building may only slow price increases, not reverse them.
There is encouraging news too. As thousands of new rental units finish and get absorbed, vacancy rates have risen and rent growth has slowed in many cities.
The takeaway is balance. Building more is necessary, but it is not a switch that flips affordability overnight. For more on the scale of the challenge, read Urgent: Affordable Housing Canada.
Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479
Your move while supply catches up: a step-by-step plan
You cannot control the construction pipeline, but you can control how ready you are.
Start with the numbers. The down payment calculator shows how close you are to your goal.
Thinking of adding a unit? Financing the missing middle yourself
Direct answer: Many provinces and cities now let homeowners add a second unit, build a laneway home, or convert a house into a multiplex without rezoning. These projects are usually financed by refinancing your mortgage, using a home equity line of credit, or taking equity out at renewal.
This is one of the most direct ways missing middle supply grows. Recent zoning reforms in provinces like Ontario and British Columbia have made gentle density easier on existing lots.
Financing these builds can be more complex than a standard purchase, since how much you can borrow depends on your home’s value, your equity, and how a lender treats any future rental income.
This is exactly the kind of file where independent advice pays off. Razi Khan, Founder, CEO and Licensed Mortgage Broker at Pegasus with more than 20 years of experience, specializes in structuring complex and alternative-lending files like these.
To estimate what your equity could unlock, try the home equity calculator.
Common mistakes to avoid in a supply-shifting market
A shifting market rewards preparation. These are the missteps we see most often.
- ✕Waiting indefinitely for a crash. Prices may ease slowly, but betting on a sudden collapse can keep you renting for years.
- ✕Assuming every new home helps buyers. Much of 2025’s growth was rental, so more cranes do not mean more homes to buy.
- ✕Ignoring the stress test. Your real budget is set by the qualifying rate, not the rate you are quoted.
- ✕Skipping pre-approval. Shopping without it can mean falling for a home you cannot finance.
- ✕Overlooking missing middle options. A townhouse or plex unit may fit your budget when a detached home will not.
- ✕Confusing “starts” with finished homes. A start is a foundation, not move-in keys; completion can take years.
- ✕Going it alone. A broker compares lenders on your behalf. See why work with a broker.
Frequently asked questions
Will building more homes actually make houses cheaper in Canada?
More homes can ease prices and rents, but the effect is typically gradual rather than immediate. Supply is one of several forces, alongside interest rates, taxes and population growth. Most economists call building more necessary but not sufficient on its own.
What is “missing middle” housing in plain English?
Missing middle housing means medium-density homes between detached houses and high-rise towers, such as duplexes, triplexes, fourplexes, townhouses, low-rise apartments and laneway suites. They were common decades ago but largely disappeared from new building, which is why they are called “missing.”
Did Canada really build more homes in 2025?
Yes. National housing starts rose about 6% in 2025 to roughly 259,000 units, according to CMHC’s Spring 2026 Housing Supply Report. Most of the growth came from record rental construction and more missing middle homes, while supply aimed at buyers weakened.
Why are so many rentals being built but barely any condos?
Condominium presales collapsed and unsold units piled up, while demand and financing shifted toward rentals. Some builders delayed, cancelled or converted ownership projects into rental ones. The result is strong rental construction and a thinner pipeline of new homes for buyers.
How long until more supply makes homes affordable?
There is no fixed timeline, but meaningful change typically takes years. CMHC estimates Canada needs millions of additional homes by 2030 to restore affordability. Rents have begun easing in some cities as new rentals finish, though ownership affordability tends to move more slowly.
Can I build a duplex or fourplex on my own property now?
In many areas, yes. Provinces like Ontario and British Columbia have reformed zoning to allow more units on existing lots, often without rezoning. Rules vary by municipality, so confirm what your local zoning permits before planning a project.
Should I buy now or wait for prices to come down?
That depends on your finances, not just the market. Since prices may ease only gradually, the better focus is readiness: a solid down payment, a stress-tested budget and a pre-approval. Waiting indefinitely can cost you more in rent than you save.
Can a mortgage broker help me finance a multi-unit or missing-middle home?
Yes. A broker compares many lenders to find financing that fits less standard properties, including multiplexes and homes with rental income. This helps with complex files, where lender rules differ widely. Brokerage service is typically free to you, since the lender pays the broker. See the Pegasus FAQ.
Where this leaves you
Canada is building more, but mostly rentals, and ownership supply remains tight. Affordability may improve slowly, so the people who do best usually prepared rather than waited.
You do not need a perfect market to make a smart move. You need a clear budget, a realistic list of home types, and a lender lineup that fits your situation. Because brokers are paid by the lender, the guidance is free to you.
This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions.
Founder, CEO & Licensed Mortgage Broker, Pegasus Mortgage Lending Center Inc. (FSRA Lic # 11479). More than 20 years helping Canadians navigate first-time, complex and alternative-lending mortgages. View profile →