The Paradigm Shift in Canadian Urban Planning: Zoning for Higher Density and Its Far-Reaching Impact

Winnipeg, MB Dec 14, 2023 – In an era marked by rapid urbanization and housing crises, Canadian cities are undergoing a profound transformation. By shifting zoning policies to favor higher-density housing, they aim to address not only the acute need for affordable housing but also the imperatives of sustainable urban development. This strategic move, while influencing property values, is also reshaping urban services and revenue models. It's a response deeply rooted in the broader context of the importance of affordable housing in Canadian society.

Addressing Housing and Environmental Concerns 

The trend towards urban densification is a strategic response to a constellation of challenges:

• Housing Demand: Statistics Canada reports a steady population increase in urban areas, particularly in major cities, where the annual growth rate is around 1.4%. This growth has led to a significant shortfall in affordable housing options.

• Sustainable Development: The Canada Green Building Council advocates for densification as a means to reduce urban sprawl and enhance land use efficiency, thereby reducing per capita greenhouse gas emissions.

• Economic Growth: Denser neighborhoods are often synonymous with increased economic activity, as noted by the Canadian Urban Institute, which observed a 10-15% higher business density in such areas.

The Canadian Housing Accelerator Fund: Facilitating Change

This federal initiative, with a budget exceeding $4 billion, aims to generate over 100,000 new housing units by encouraging municipalities to amend zoning laws for multi-family housing in traditionally single-family areas. It also supports necessary infrastructure development to accommodate increased density.

The Importance of Affordable Housing in Canadian Cities

Affordable housing is more than just a shelter; it's foundational to the well-being of individuals and communities:

• Economic Stability: Affordable housing frees up income for other essential needs, contributing to overall economic stability for families. A study by the Canadian Mortgage and Housing Corporation (CMHC) found that households in affordable housing spend a larger proportion of their income on goods and services, stimulating local economies.

• Social Equity: Access to affordable housing is a key factor in reducing social inequalities. The CMHC also reports that secure and affordable housing is linked to better educational and job opportunities, especially for low-income families.

• Health Benefits: There is a strong correlation between affordable housing and improved health outcomes. According to a report by the Public Health Agency of Canada, stable and affordable housing contributes to physical and mental well-being, reducing healthcare costs.

Statistics: The Affordable Housing Crisis in Canada

The need for affordable housing in Canada is underscored by compelling statistics:

• Rental Market Strain: As per the 2021 National Housing Strategy report, nearly 1.7 million Canadian households (about 14.6% of all households) are in housing need, meaning they spend more than 30% of their before-tax income on housing.

• Homeownership Challenges: The Canadian Real Estate Association notes that the national average house price was approximately $686,000 in 2021, a significant jump from previous years, putting homeownership out of reach for many.

• Waiting Lists for Social Housing: Data from various municipal sources indicate that tens of thousands of families across Canada are on waiting lists for social housing, with wait times extending several years in major cities.

Zoning Changes and Property Values: A Complex Relationship 

The transition to higher-density zoning significantly alters property valuations:

• Surge in Multi-Use Property Values: Properties in rezoned areas often see an increase in market value, some by as much as 20-25%, reflecting their potential for development.

• Varied Impacts on Neighboring Properties: The effect on adjacent single-family homes is diverse. While some benefit from improved infrastructure, others may face a decrease in value due to concerns over increased traffic and changes in neighborhood aesthetics.

The Role of NIMBYism in Urban Planning

 NIMBY (Not in My Backyard) attitudes significantly shape public policy related to urban development:

• Resistance to Densification: Many urban development initiatives face public opposition, often leading to challenges in policy execution.

• Governments’ Balancing Act: Balancing the urgent need for more housing with community concerns requires careful policy-making and community engagement.

Enhancing City Services and Revenues Through Strategic Planning

Densification offers several benefits to city services and revenues:

• Tax Base Expansion: Higher-density areas contribute to a larger tax base, allowing for more funds to improve public services.

• Efficient Service Delivery: Denser areas allow for more efficient delivery of city services like waste collection, snow clearning, and public transit.

• Infrastructure Optimization: Densification makes better use of existing infrastructure and justifies investments in new infrastructure, thereby improving overall urban efficiency.

• Economic Vibrancy: Higher population density stimulates local economies by increasing demand for goods and services.

Adapting Appraisal Practices to New Realities

Real estate professionals are adapting their valuation methods to reflect these zoning changes, considering factors like potential development opportunities and neighborhood dynamics.

A New Era of Urban Living in Canada

The shift towards higher-density housing in Canada is a multi-layered response to the pressing need for affordable housing and sustainable urban development. It presents a complex scenario for stakeholders, including property owners, investors, urban planners, and policymakers. Understanding the nuances of this evolving landscape is crucial for making informed decisions and shaping the future of Canadian cities.