Canadian housing policy wants you to live in shoebox condos in the middle of nowhere

Jane Jacobs was wrong. So suggests the drift in government housing policy toward community-killing high-rises. The urbanist who fought for low-rise living in townhouses and apartment blocks didn’t believe livable communities existed high in the sky. Today’s decision-makers beg to differ.

Passé are eyes on the street, as is economically mixed and human-scaled density, defined by street-centric neighbourhoods where residents easily walk to local shops, entertainment, transit and civic spaces.

Tall sprawl is today’s preference, with vertical cities comprised of massive towers that house thousands and sit on podiums, circled by small patches of grass with a sprinkling of trees and the odd bench or two. Too often, governments measure the quality of housing by the number of units produced, rather than the livability of the communities being built.

The consequences, if governments are wrong and Ms. Jacobs proven right, will scar the Canadian housing landscape for generations.

For Ms. Jacobs, who passed in 2006, livable communities thrived on diversity: old buildings mixed with new ones; renters beside owners; singles, couples, families with children and seniors; and small builders alongside larger developers capable of more complex projects.

Opinion: Buyers want houses, but housing policy keeps pushing condo shoeboxes

Her classic work, Death and Life of Great American Cities, is a community-building blueprint. Yet, the livable density it points to is too often ruled out by zoning restrictions, making towers the more viable option for developers tasked with building housing quickly and for many.

Ms. Jacob’s work didn’t suit the times when the economic reaction to the COVID-19 pandemic in 2020 set off a housing boom.

Real interest rates reached historic lows, while condominium unit sizes continued to shrink in size, keeping booming prices per square foot in reach for first-time buyers and mom-and-pop investors.

That boom peaked in 2021 and began petering out in late 2022. In 2024, Toronto brought a record 25,572 condominium units to market, according to the Canada Mortgage and Housing Corporation. In Vancouver, that number was 12,442.

Developers chased profits and rushed completions to move on to their next towering project. Planning offices and the municipal officials behind them chased their version of profits, too – development charges.

In Toronto, those charges were more than $120,000 per condominium unit by 2025, according to a CMHC report from last December.

The smallest condos are being hit hardest by the market decline

No government took tall sprawl more to heart than Doug Ford’s in Ontario. It sees merit in extreme density. The Bridge Station project, located north of Toronto, is an example. It proposes 20,490 apartments, housing more than 43,000 people in towers as high as 80 storeys on just 63 acres of land.

Ontario has many more Bridge Stations in its housing plans.

Such projects are pitched as the future of communities, despite severing people from street-level sidewalks in skyscrapers jammed with small units unsuited to family life and community building.

They come with overcrowding, long waits for elevators, elevated amenity decks far from the street, and, if any, monoculture chain stores that are most capable of paying the high commercial rents demanded in new builds.

The boom in the condominium market burned itself out when interest rates rapidly rose in 2022 and sales slowed through 2023 and 2024.

Today, the consequences of the condominium bust are stark. Cancelled projects are common, new builds are almost non-existent, prices are materially lower for resales, and developers are converting tall-sprawl condominium plans to the new money-maker – purpose-built rentals.

In its Fall 2026 Housing Supply Report, the CMHC notes that “purpose-built rental housing now accounts for two-thirds of all apartment starts in key markets.”

These projects are viable because of $55-billion in taxpayer-subsidized low-cost CMHC loans with long amortization periods that make them profitable for developers. An Urbanation report from last October found that in the Greater Toronto Hamilton Area, 61 condominium projects had been converted to purpose-built rentals last year. More will follow.

The era of the shoebox condo is over

Tall sprawl is finding a second coming in purpose-built rentals. It may be the housing that most Canadians turn to in the future. CMHC says “the greater long-term risk” in the Canadian housing market is the “insufficient condominium and ground-oriented housing supply that leaves too few ownership options when demand strengthens again.”

Such construction has “weakened sharply in major cities, including Toronto, Vancouver, Ottawa and Montreal.” Using a 2.5 per cent annual inflation rate, the typical detached house in Toronto will cost about $1.6-million in 2036. In Vancouver, that price is likely to be roughly $2-million.

Squeeze supply, too, and the cost will be higher.

By favouring tall sprawl, purpose-built rentals over communities with a diverse mix of street-focused housing, planners and policy-makers are betting Ms. Jacobs’s warning about the dangers of vertical cities is bunk.

If they’re wrong, a decade from now, many Canadians will have few options beyond a unit in a tower they would rather leave than live in.