The Impact Of Affordable Housing On Investors Is Shifting
It’s impossible to scroll through Canadian news without seeing headlines about affordable housing. From municipal debates to federal funding promises, it’s front and centre—and rightly so.
According to the DMC Recruitment Group’s 2025 Housing Trends Report, affordability remains one of the greatest economic and political challenges facing the country. And in the GTA, where prices continue to stretch beyond reach for the average household, the conversation isn’t going away anytime soon.
But for investors, this growing crisis is a double-edged sword. On one hand, it brings increased regulation, public scrutiny, and red tape. On the other, it presents one of the largest generational investment opportunities—if you know how to pivot strategically.
The State of Affordability in the GTA
Housing affordability has deteriorated sharply over the past decade. The Canadian Mortgage and Housing Corporation (CMHC) estimates Ontario needs 1.5 million new homes by 2031 to restore balance. Yet, the pace of new construction is lagging, hampered by high borrowing costs, labour shortages, and slow approvals.
While benchmark prices have come down from pandemic highs, the GTA still sits among the most expensive housing markets in North America. The average home price in the region hovers around $1.08 million, and even with rate cuts beginning to trickle in, affordability remains stretched.
This imbalance between supply and demand is precisely why investors are paying close attention to “missing middle” and affordable housing strategies. These aren’t just government buzzwords anymore—they’re becoming core investment theses.
The Policy Landscape: What’s Changing
Governments at every level are pushing for more “attainable” housing. Here are a few major policy shifts investors should understand:
- Multiplex legalization: Toronto and many surrounding municipalities now allow up to four units per lot, opening the door for investors to convert single-family homes into multi-unit rentals.
- Basement and garden suites: Secondary suites have been fast-tracked in planning policies, making it easier to create legal rental units in existing homes—an appealing, lower-risk entry point for investors.
- Zoning reforms and density incentives: The Province’s Bill 23 (“More Homes Built Faster Act”) encourages gentle density and reduces development charges for affordable units. Municipalities like Mississauga and Pickering are adjusting their zoning maps accordingly.
- Public-private partnerships: Cities are courting private developers and investors to co-develop underused land, offering incentives like expedited approvals or density bonuses.
The direction is clear: the government can’t solve the housing crisis alone. Private investors are being invited—sometimes pushed—into the solution.
Investor Mindset: From Speculative to Strategic
In the past, investors chased appreciation. Now, the smart ones are chasing cash flow and community value.
That means moving away from the “buy-and-wait” condo model toward projects that create real housing supply—whether that’s through:
- Duplex or triplex conversions
- Purpose-built rentals
- Co-living spaces
- Student housing near transit corridors
There’s also growing traction in affordable luxury—modern but modest builds that meet middle-income needs. These projects don’t rely on subsidies but still contribute to affordability by expanding options between high-end condos and aging rental stock.
Think of this as the new value-add play: not granite countertops, but zoning optimization and multi-unit retrofits.
How to Navigate the Opportunity
If you’re an investor eyeing this space, there are three key strategies to position yourself effectively:
1. Partner with Municipalities
Municipal governments are actively seeking collaboration with private capital. Many are releasing land or offering financial incentives for affordable and mixed-use projects.
For example, the City of Toronto’s Housing Now program offers long-term leases on city-owned land for developers who commit to a percentage of affordable units. Similar programs are emerging across Durham Region and York Region.
For investors with development or joint-venture experience, aligning with these programs not only reduces acquisition risk but also strengthens community goodwill—something that’s increasingly valuable in the public eye.
2. Invest in the “Missing Middle”
The “missing middle” refers to low-rise, multi-unit housing like duplexes, triplexes, and fourplexes—homes that blend into existing neighbourhoods while boosting density.
Investors can leverage this by:
- Converting single-family homes into multiplexes
- Building laneway or garden suites
- Acquiring underutilized properties with zoning flexibility
Durham, Hamilton, and Kitchener-Waterloo are excellent examples of secondary markets embracing these changes. They’re close enough to Toronto to benefit from urban migration, but with more room to build and friendlier municipal processes.
3. Explore Creative Housing Models
The definition of “home” is evolving. With affordability strained, demand is growing for co-living, modular housing, and rent-to-own models.
Co-living—multiple tenants sharing common areas—has already taken off in markets like Vancouver and Montreal. For investors, it’s a cash-flow booster that taps into a rising demographic: young professionals priced out of ownership but seeking community and quality living.
Meanwhile, modular housing offers faster construction at lower cost—a scalable solution for those thinking bigger than a single property.
The Risks: Regulation and Sentiment
Of course, opportunity comes with caution. The political focus on affordability means increased scrutiny of investor behaviour. Speculative buying, short-term rentals, and renovictions are under the microscope. Municipalities are cracking down on illegal units, while the federal government’s temporary ban on non-resident buyers and flipping tax rules show where sentiment lies.
Investors who thrive in this environment will be those who build in alignment with policy, not against it.
Transparency, legal compliance, and community benefit are no longer optional—they’re part of the business model. And investors who adopt this ethos will find doors opening, not closing.
Looking Ahead: The Long Game
Affordable housing isn’t just a social issue; it’s an economic one. When essential workers, young families, and newcomers can’t find housing near jobs, local economies suffer. Investors who can help fill that gap—profitably and sustainably—are positioned for long-term wins.
The gold rush is shifting. Instead of chasing speculative condos in downtown Toronto, the smart money is flowing to Durham, Hamilton, and mid-sized cities where affordability initiatives, infrastructure projects, and population growth converge.
The choice is clear: investors can either wait on the sidelines for “policy certainty,” or become part of the solution and ride the wave of long-term demand.
Because the truth is—Canada isn’t just building houses. It’s rebuilding how we think about housing altogether.
Let’s build wealth the smart way – together!
And, if you’re thinking about buying, selling or investing in Durham Region or Toronto, let’s chat! I can be reached at 647-896.6584, by email at info@serenaholmesrealtor.com or by filling out this simple contact form. You can also kick off your search for Durham Region homes for sale by clicking here.
In addition, make sure we’re connected on social and you’ve subscribed to my YouTube Channel. And, for other articles specific to real estate investing, click here.
Sources:
- DMC Recruitment Group: 2025 Real Estate Trends Report
- CMHC: Housing Supply Report 2025
- City of Toronto Housing Now Program
