If Canada built like the US, home prices would be 10% lower, new CMHC research finds
A new report from the Canada Mortgage and Housing Corporation (CMHC) has put a hard number on what two decades of regulatory inertia and geographic constraints have cost Canadians, and the comparison with the United States is damning.
Using modelling drawn from Organisation for Economic Co-operation and Development (OECD) research, CMHC chief economist Mathieu Laberge found that Canada's housing stock would be approximately 30% larger today and home prices roughly 10% lower had the country's residential construction industry matched the responsiveness of American builders between 2006 and 2024.
Kevin Hughes of Canada Mortgage and Housing Corporation said housing starts rose 17% month over month, though ongoing financing pressures, labour shortages, and weak presale demand continue to weigh on the broader construction outlook.https://t.co/q39iy3GS7f
— Canadian Mortgage Professional Magazine (@CMPmagazine) May 15, 2026
Why Canada can't build at the pace the market demands
Three structural forces explain the gap. First, municipal zoning and land-use rules are far more restrictive in Canada than in many American cities.
In many US metropolitan areas, fewer zoning and land-use constraints make it significantly easier for builders to increase supply when demand rises.
In Canada, tighter regulations, particularly in major urban centres, have slowed development and limited the number of homes built.
Geography is the second barrier. Cities like Vancouver and Montreal are bounded by mountains and waterways that physically restrict outward expansion, constraints that simply do not exist to the same degree across most US markets.
The third factor is demographic: Canada's comparatively small network of large cities leaves households with fewer comparable alternatives when seeking work, reducing the competitive pressure that, in the US pushes developers to respond quickly when demand spikes.
The toll of regulatory drag is measurable. A separate CMHC study, published in February 2026, found that when a city's land-use rules become 10% more restrictive, house prices rise by approximately 14%. That's a compounding penalty that has accumulated across two decades of municipal inaction on housing approvals.
Vancouver and Toronto, the country's most constrained markets, recorded rezoning approval rates of just 47%.
Taxation makes the economics even harder
Regulation is not the only obstacle. Taxation accounts for roughly 36% of the cost of a new home in Canada, with development charges, HST and land-transfer taxes making up the largest share.
University of Ottawa economist Mike Moffatt, described the situation as "a cost-of-delivery crisis," one in which it is "simply too expensive, by policy design, to build homes that middle-class families can afford, even before land and profit are considered."
CIBC deputy chief economist Benjamin Tal has been blunter still. "The market is broken, the market is frozen," he said. "It's too expensive to buy, not expensive enough to build."
The Carney government has pledged a response: Build Canada Homes will deploy approximately $25 billion in public financing for prefab and affordable housing alongside $10 billion in low-rate capital, while a 10-year, $51-billion Build Communities Strong Fund targets roads, water and transit infrastructure. GST relief on new homes under $1 million for first-time buyers is also in place.
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