The Missing Middle Initiative just released a comprehensive report that should worry anyone who cares about young Canadians trying to buy their first home. The numbers are stark, and the recommendations are bold.

Between 2011 and 2021, homeownership among 30 to 34-year-olds dropped from 60% to 52%. That's not just a blip. That's a generation getting priced out of a dream that used to be achievable for middle-class families.

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The Gap Between Dreams and Reality

Here's what makes this particularly painful: 86% of non-homeowners under 30 still want to buy a home someday. The desire hasn't disappeared. But only 51% of them believe they'll actually pull it off.

Think about that for a second. Nearly half of young Canadians who dream of homeownership have already accepted it probably won't happen.

The Missing Middle Initiative's report, released this January, argues this isn't just about individual disappointment. It's about fundamental failures in how Canada builds and distributes housing. And they're not shy about pointing fingers or proposing solutions.

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Four Problems That Got Us Here

The report identifies four core issues that have systematically locked young people out of ownership:

Housing construction hasn't kept pace with population growth. This one sounds obvious, but the scale matters. Canada's adult population has been growing rapidly thanks to immigration and the echo boom generation hitting adulthood. But new housing starts? They've been falling behind since 2009 when you measure them against population growth.

The report shows that between 2004-09 and 2014-19, ground-oriented housing starts per 100 new adults fell from 39 to 27 units. That's a 12-unit drop. Apartment starts increased by 7 units per 100 new adults during the same period, which helped, but didn't fully compensate.

Then after 2019, things got worse. Population growth surged while both ground-oriented and apartment construction rates dropped relative to the number of new adults entering the market.

The types of homes being built don't match what families need. Canada built 1.2 million housing starts over the past five years, numbers not seen since the 1970s. But there's been a massive shift in what's actually being constructed.

Apartment units now make up five times more construction than they did in the late 1990s. Meanwhile, ground-oriented homes like single-detached houses, semi-detached, and townhouses have been in steady decline since 2000.

According to a recent Abacus Data poll the report cites, 61% of Canadians say there aren't enough homes being built that meet their size and layout needs. About 51% of respondents believe municipal zoning rules are holding back the "missing middle" supply of 2-3 bedroom family-sized units.

Ownership housing specifically has been declining. Between 1989-94 and 2019-24, freehold ownership housing starts fell by 40% when measured per 100 new adults. The report notes that while rental housing and condos saw growth through much of this period, freehold ownership has been in steady decline since the beginning of the century.

Even condo starts, which boomed from the late 1990s through the mid-2010s, have dropped dramatically in recent years. Between 2014-19 and 2019-24, condo starts per 100 new adults fell from 18 to 11 units.

Investors have been buying up homes meant for families. This might be the most frustrating part. Between 2011 and 2021, approximately 400,000 more ground-oriented homes and 200,000 more apartment units were completed for the ownership market than actually ended up occupied by owners.

Where did they go? The data shows nearly identical increases in rented homes exceeding housing completions. In other words, investors bought homes intended for owner-occupancy and converted them to rentals.

The report is careful to note this happened across Canada and that investors weren't necessarily buying up newly built homes specifically. Rather, the total stock of ground-oriented homes owned by investors and rented out increased by roughly 300,000 units during this period.

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The Monthly Payment Paradox

Here's an irony that probably feels cruel to young renters: in many cases, their monthly rent is as high or higher than what their mortgage payments would be if they could buy a home. But they can't buy because they can't save enough for the down payment.

High rents make it harder to save. Higher home prices require larger down payments. According to the Missing Middle Initiative, young people have experienced "the more I save, the further behind I fall" as required down payments have grown faster than their savings capacity.

The report notes that average rent for 2-bedroom units climbed 5.1% year-over-year in 2025, despite softening rental market conditions overall. Affordable units remain in high demand.

Price-to-income ratios remain well above 21st-century averages, even though they've fallen from pandemic-era peaks. And mortgage rates are higher than they've been for most of the past 25 years. It's a perfect storm of unaffordability.

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Four Goals, Ten Recommendations

The Missing Middle Initiative argues the federal government needs to adopt four clear goals:

Build homes for real families across the entire housing continuum. This means scaling up construction of both rental and ownership options that actually meet the needs of families of all sizes.

Rebuild the pathway to homeownership. Make it easier for renters to become first-time buyers by simplifying how they save for down payments and creating programs that let them transition to ownership without increasing their monthly housing costs.

Right-size housing for existing families. Help existing homeowners, particularly young families and seniors, move into more suitable housing. This frees up existing homes for first-time buyers.

Shift the market from portfolios to families. Reverse the trend of investors buying single-family homes by channeling investment dollars toward building new purpose-built rental housing instead.

To achieve these goals, the report lays out ten specific recommendations for the federal government:

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Creating Better Coordination

Recommendation 1 calls for establishing a national housing secretariat or similar permanent mechanism to coordinate housing policy across federal, provincial, and municipal governments. The report emphasizes that no single level of government can fix this alone.

Recommendation 2 proposes introducing annual housing start targets broken down by unit size and ownership type. These targets would be made available to provinces and municipalities for planning and would be updated when immigration targets or other population-affecting policies change.

The recommendation specifically mentions ensuring Build Canada Homes creates a diverse mix of unit sizes and both rental and ownership options. The report argues that "when it comes to homes, one size does not fit all."

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Fixing the Supply Side

Recommendation 3 suggests creating a special application stream in CMHC's Apartment Construction Loan Program for smaller builders who want to build 2-4 unit buildings or need loans under $1 million.

Currently, the ACLP only funds buildings with 5 or more units and requires minimum loans of $1 million. The recommendation would reduce the minimum to 2 units, lower or eliminate the $1 million threshold, introduce simplified underwriting for buildings under 5 units, and fast-track approvals for projects using CMHC's housing catalogue designs.

Recommendation 4 tackles one of the sneakier costs in new home construction: the way development charges are currently handled. Right now, developers pay these charges upfront when they get their building permit, carry them on construction loans (paying interest), then pass along both the charges and the interest to buyers. Then buyers pay HST on the whole thing, creating a tax-on-tax scenario.

The Missing Middle Initiative proposes switching to a direct-to-buyer development charge system where these charges appear as a separate line item on purchase agreements, get paid at closing rather than upfront, and are exempt from HST.

According to their previous analysis, this change could save homebuyers up to $68,000 by eliminating interest costs, developer margins on those costs, and the tax-on-tax problem.

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Helping First-Time Buyers

Recommendation 5 proposes introducing a federal down payment assistance program for first-time homebuyers. The report suggests two possible models: low-interest loans of up to 5% of the home's cost (similar to programs in PEI and New Brunswick) or reducing down payment requirements for qualifying first-time buyers purchasing new homes.

The report notes these programs could be limited to newly built homes to avoid stimulating demand for existing housing stock.

Recommendation 6 calls for indexing the Home Buyers' Plan and First Home Savings Account contribution limits to inflation. The report argues these programs lose effectiveness over time as home prices rise but maximum savings levels stay frozen.

Recommendation 7 proposes temporarily expanding the GST/HST New Housing Rebate for three years. Currently, homes over $450,000 get no rebate because the threshold hasn't been updated since 1991. Back then, the average GTA home cost $235,000. By 2024, that average hit $1.12 million.

The recommendation would provide a 100% GST rebate on new homes up to $1 million and a partial rebate for homes between $1 million and $1.5 million. This essentially matches the thresholds in the recently announced First-Time Home Buyers' GST Rebate but extends it to all qualifying buyers, not just first-timers.

The Parliamentary Budget Office estimates this would cost $300-400 million annually for the first-time buyer version. The expanded version would cost up to $1.6 billion per year, though the report argues this would be partially offset by taxes from increased construction.

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Unlocking Existing Homes

Recommendation 8 focuses on seniors, calling for a federal housing strategy that builds desirable housing options enabling aging Canadians to downsize and stay in their communities.

The report notes many seniors want to downsize but can't find suitable nearby options. They're "involuntarily overhoused," keeping family-sized homes that younger families with children need.

Recommendation 9 urges the government to finally launch consultations this spring on the long-promised Multi-Unit Rental Building (MURB) tax provision. This would revive a successful 1970s-era program that helped smaller-scale investors finance construction of hundreds of thousands of rental units.

The goal would be ensuring rental projects beginning construction on or after January 1, 2027 qualify for the provision.

Recommendation 10 proposes creating a time-limited incentive for investors who currently own non-purpose-built rental properties (basically, single-family homes they're renting out) to sell these units to non-investors and reinvest the proceeds into MURB-eligible projects.

The report suggests this could include temporary reductions in capital gains taxes on such sales. The idea is to simultaneously get family homes back into family hands while stimulating new purpose-built rental construction.

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The Fiscal Reality Check

The Missing Middle Initiative acknowledges these recommendations face real constraints. Federal dollars are increasingly scarce. The government has committed to reducing program spending while also trying to scale up the military.

But the report makes a compelling counter-argument about the cost of inaction. Their analysis of the Greater Toronto Area found that if the current housing construction slump continues, all three levels of government would lose $6 billion annually in tax revenue. That doesn't even count the 41,000 jobs that would disappear in the GTA alone.

The report argues some of these recommendations could partially or fully pay for themselves through increased tax revenue from accelerated homebuilding. For example, policies that lower taxes on new construction (like development charge reforms and GST rebate expansions) only apply to new builds, so they don't stimulate demand for existing housing that would drive prices higher.

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What Hasn't Worked

The report notes the federal government has already implemented several reforms, including the National Housing Strategy, changes to mortgage amortization rules, and promises of Build Canada Homes. These moves are helpful, but according to the Missing Middle Initiative, they're not enough.

The Abacus poll referenced throughout the report paints a grim picture of public sentiment. About 87% of Canadians are concerned or very concerned about housing, rising to 93% among Gen Z and Millennials. Some 64% fear current policies will leave middle-income Canadians behind, and 72% say the crisis won't improve without a major government shift.

Perhaps most telling: just 4 in 10 Canadians believe the dream of homeownership is still alive. Nearly half of young Canadians say they've considered leaving their city or province entirely because of housing costs.

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Housing as a System

What makes this report different from typical "build more housing" arguments is its recognition that housing functions as a system. Policies that increase rental supply can reduce rents, making it easier for renters to save for down payments and freeing up rental units for other tenants. Policies that help seniors downsize or families upsize can free up homes for the next generation.

The report emphasizes this interconnectedness repeatedly. You can't just create programs for first-time buyers and call it done. You need to address supply across the continuum, help existing homeowners move into right-sized housing, and redirect investor capital from buying existing homes to building new rental properties.

That's why the report proposes such a wide-ranging set of reforms rather than focusing narrowly on down payment assistance or construction subsidies.

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What Happens Next

The federal government now has a detailed blueprint on the table. Whether they'll actually implement these recommendations remains to be seen, especially given the fiscal constraints the report acknowledges.

But the Missing Middle Initiative is clear: without substantial action, homeownership rates will continue declining, particularly among younger Canadians. The generation that grew up believing homeownership was an achievable goal for middle-class families is watching that assumption collapse.

The question is whether governments are willing to make the coordinated, sustained effort required to reverse that trend. The recommendations are specific, grounded in data, and designed to work within federal constraints.

Time will tell if anyone's listening.

For Kelowna residents wondering what this means locally, these trends play out differently in different communities. Some cities haven't experienced the same dramatic decline in homebuilding relative to population growth. Others have seen even sharper drops than the national averages shown in this report.

But the fundamental challenges remain: building enough housing to match population growth, ensuring that housing includes family-sized ownership options, and creating clear pathways for renters to become owners without competing against investors for every available home.

Those challenges don't respect municipal boundaries, which is exactly why the Missing Middle Initiative is calling for coordinated federal action. The pathway to homeownership that Canada built for previous generations has eroded. Building a new one will require more than good intentions.

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If you're navigating the Okanagan real estate market or wondering how these national trends affect your homeownership journey, the team at Coldwell Banker Horizon Realty can help you understand your options and find the right path forward.

Source: Missing Middle Intiative