Missing Middle

Steve Saretsky -

Happy Monday Morning!

A few weeks ago I wrote a post called Everything is a Choice. I argued that many of the housing issues we are facing today are policy decisions. They are choices made by elected officials. Whether it be interest rates, immigration policy, taxes, mortgage underwriting standards, or municipal zoning. Many of these issues can be addressed with the stroke of a pen.

Love him or hate him, David Eby is doing just that. The new premier of BC just announced single-family zoning across British Columbia communities will come to an end as early as this fall, when the provincial government is expected to introduce legislation that overrides the zoning regulations of municipal governments. The legislation changes would allow up to four homes on a traditional single-family lot in municipalities across the province. This enables homeowners to create secondary suites, such as basement units or potentially even duplexes, townhomes, and triplexes.


This is what you call missing middle housing and it is badly needed.

“Without more types of homes, we risk pushing more of our future generation away. We risk creating neighbourhoods where playgrounds are quiet, sidewalks are empty, and coffee shops are vacant. Small-scale, multi-unit homes are how we address this challenge,” says BC’s housing minister Ravi Kahlon.

He is not wrong.

Over the past 10-15 years we’ve been building investment condos. Junior one and two bedroom condos in the sky. There’s a few reasons for this, mostly because that’s what developers have been incentivized to build through horrendously bad policy, think taxes and rent controls.


So developers built tiny condos to sell to investors, with floor plans catered to maximize investor cash flow. By doing so, most families throughout BC have been left with the prospect of raising a family in a small two bedroom condo or leveraging themselves to the hilt to get into a single family house. And we wonder why young people aren’t having children anymore?

Quite simply, we have not been building missing middle product and this is why entry level single family houses continue to find a perpetual bid even with mortgage rates doubling. Young families working from home are desperate for a third bedroom and antiquated zoning has only facilitated these shortages.

Consider this. In the city of Vancouver it is illegal to build anything other than a house or duplex in the yellow areas below. The benchmark price for a house in the yellow area, $2.5M…


Ground-oriented housing supply is coming much to the chagrin of the NIMBY’s (Not in my backyard) folks. We have a real life trial balloon in New Zealand. In 2016 the city of Auckland upzoned most of their city to allow multifamily housing from 3 to 6 stories. Six years later its lead to an explosion in multifamily construction, up 110% while the rest of the country only increased 40%.

Source: Leo Spalteholz

In 2021, the rest of New Zealand followed by banning single house zones in all major cities.

This past week, the city of Toronto proposed to allow the development of duplexes, triplexes, and fourplexes on all lands currently zoned single family detached.

It is happening, more supply cometh. While land owners will benefit in the near term with a lift in land values, families will benefit in the longer run with a wider selection of much needed ground-oriented housing supply. With a million people flooding into this country last year, it’s time to get out of the way and get building.

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The Saretsky Report. December 2022