Canada's housing market isn't just dealing with a supply problem. It's dealing with a scale problem.

According to recent analysis from the Canada Mortgage and Housing Corporation, the country's fragmented housing sector is holding back progress on affordability and supply. Mathieu Laberge, CMHC's chief economist, put it bluntly: unlocking housing supply at scale is critical if we want to actually move the needle on these issues.

The numbers tell the story. In 2024, Canada had more than 40,000 businesses in residential construction. Only six of them employed more than 500 people. Nearly 70% were micro operations with one to four employees.

That's not a typo. Most of the companies building Canadian homes are tiny.

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The Real Estate Side Looks Similar

The fragmentation doesn't stop with construction. Look at real estate leasing and management, and you'll see the same pattern. Over 80% of firms employ fewer than five people. That's actually higher fragmentation than the national average across all industries.

Even the not-for-profit housing providers face this challenge. Most Canadian organizations manage a few hundred units. The larger ones? They're typically overseeing between 1,000 and 2,000 units.

Compare that to the Netherlands, where not-for-profit housing associations manage an average of 10,000 units. Some oversee as many as 80,000.

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Why Size Actually Matters Here

This isn't about bigger is always better. It's about capacity.

Larger organizations can accumulate funds and resources. They can dedicate talent to figuring out how to innovate construction and delivery methods. They can invest in new building techniques, adopt technologies like AI, and create steady demand for modular and prefabricated housing.

Countries like Sweden have already made these practices standard. Canada is still catching up.

Ray Sullivan of the Canadian Housing and Renewal Association agrees. Scale brings more than operational efficiency. It brings the ability to actually change how housing gets built.

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The Government Funding Trap

Here's where it gets interesting for not-for-profits.

In the Netherlands, housing associations fund new development through rental income and loans. Government intervention happens only as a last resort. They've built a system where affordable housing providers can sustain themselves.

Canadian organizations, by contrast, rely heavily on ad hoc government funding. It's a cycle that keeps them small and dependent.

Laberge pointed out that Canada has a AAA debt rating. Imagine what could happen if the country leveraged that to strengthen and expand the not-for-profit housing sector. First step? Allow these organizations to use the equity in their current assets to build new affordable projects.

There's dormant capital sitting there. Millions of it.

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What Needs to Happen

The federal government wants to double housing starts and embrace modular construction. That puts pressure on private builders and not-for-profits alike to modernize.

But modernization requires scale. And scale requires consolidation.

Laberge emphasized that allowing not-for-profits to leverage their existing equity is a necessary first step. With the right incentives and focus on consolidation, Canada could accelerate the delivery of affordable homes significantly.

The international models exist. The Netherlands shows it can work. Sweden shows it can work. Canada has the credit rating and the need.

The question is whether the industry and policymakers will take the bold steps required. Because at this point, incremental changes aren't cutting it.

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The Bottom Line

Canada's housing sector stands at a crossroads. The fragmented structure that worked in the past isn't equipped to handle current demand. Scaling up both the private construction sector and not-for-profit providers isn't just about efficiency. It's about creating organizations capable of innovation, sustainability, and real impact.

The tools are available. The examples are out there. Now it's about execution.

As Laberge said, now is the time for the housing sector to rise to the challenge. Whether buyers, renters, or real estate professionals, we're all waiting to see if it will.