Barriers to Housing Innovation Adoption: Uncovering the Roadblocks for Canadian Homeowners
Executive Summary
Affordability challenges, increasing urban density, and a growing demand for diverse housing options are straining Canada's housing market. Such burdens have driven interest in innovative solutions such as Accessory Dwelling Units (ADUs), modular and prefabricated housing, middle housing, and community bonds. Yet, despite the potential benefits, many Canadians remain hesitant to adopt these alternatives. This study employed a structured survey of 4,953 Canadian homeowners and prospective homeowners to examine the psychological and systemic barriers underlying this reluctance.
Using this methodology, we uncovered the following key insights:
- Awareness Gap in Housing Innovations: Less than 12% of Canadian homeowners have limited familiarity with innovations like ADUs, middle housing, and community bonds. Increasing awareness of these innovations could open doors to affordable and flexible housing options beyond traditional choices.
- Building Trust in Housing Innovations: Earning homeowners' trust in housing innovations relies on transparency, credibility, and impartiality. Homeowners favor verifiable information (67%), messages from experts (51%), and content free from financial or political bias (49%). Effective communication should balance risks and benefits and use professional, visually engaging formats to build credibility.
In particular, we gained the following understandings that were specific to each innovation:
- Barriers to Accessory Dwelling Unit (ADU) Adoption: Despite benefits like rental income and added property value, only 18% of homeowners would consider adopting ADUs. Barriers include property constraints, regulatory issues, and loss of outdoor space—with almost half of homeowners surveyed fearing this last issue. Drivers of adoption identified by surveyed homeowners include clearer regulations and messaging highlighting long-term benefits.
- Perceptions of Prefabricated (Prefab) and Modular Housing: Although awareness is high, skepticism toward prefab and modular homes persists due to quality concerns and limited customization, with 31% hesitant to consider buying them in the future. Emphasizing speed, cost-effectiveness, high-quality standards, and providing clear regulatory information could increase acceptance.
- Challenges for Middle Housing Adoption: Adoption of middle housing remains relatively low, with only 13% of homeowners interested in purchasing this type of innovation. This is mainly due to privacy concerns (48%) and increased proximity to neighbors (44%). However, perceived low maintenance (36%) and affordability (30%) are appealing to homeowners, along with rental income potential (30%).
- Understanding and Promoting Community Bonds: Community bonds, a way for Canadians to invest in local housing projects, remain underutilized, with 42% not interested in investing and 39% neutral. Perceived limited availability (34%) and a lack of understanding (29%) are significant barriers, even though 74% of respondents reported having at least $500 available for any type of investment. Sharing success stories and highlighting endorsements from local champions can help build trust and show the impact of this innovation.
Introduction
Canada’s housing market is experiencing mounting pressures ranging from affordability challenges to urban density constraints, prompting many to turn their attention to innovative housing solutions.
In October 2024, Canadian home sales surged by 7.7% compared to the previous month and 30% year-over-year, correlating with the Bank of Canada's interest rate cuts. Despite this uptick in sales, the national average selling price increased by 6% over the past year, indicating persistent affordability issues.1
Urban density is also a pressing concern. From 2016 to 2021, the downtown populations of Canada's large urban centers grew at nearly twice the pace of the urban centers as a whole, despite a pause during the pandemic.2 Simultaneously, urban spread continues, accelerating in many urban centers, particularly in suburbs located farthest from downtown.
Options like Accessory Dwelling Units (ADUs), modular and prefabricated housing, middle housing, and community bonds promise new ways to meet housing demands efficiently. These alternatives offer a range of benefits for homeowners: the potential for additional rental income, quicker construction timelines, and reduced environmental impact through sustainable building practices. However, despite these advantages, many Canadians remain hesitant to adopt such alternatives.
This reluctance reflects a broader pattern across the country, where growing interest in housing innovations is evident3—but actual adoption continues to lag.4 Factors such as perceived regulatory complexity, financial uncertainty, and attachment to traditional housing types contribute to the slow uptake of innovative solutions. By understanding the psychological and systemic barriers behind these decisions, stakeholders can gain crucial insights that may help bridge the gap between interest and action, potentially unlocking new pathways to affordable, flexible housing for a diverse population.
References
- Canadian Real Estate Association. (2024, November 15). Canadian home sales see surprise jump in October. Retrieved from https://www.crea.ca/media-hub/news/canadian-home-sales-see-surprise-jump-in-october/
- Statistics Canada. (2022, February 9). Canada's large urban centres continue to grow and spread. Retrieved from https://www150.statcan.gc.ca/n1/daily-quotidien/220209/dq220209b-eng.htm
- Kalia A. (2023, December 22). REMAX 2024 Housing Market Outlook – Ontario & GTA. Condo Pundit. https://condopundit.com/remax-2024-housing-market-outlook/
- Canada Mortgage and Housing Corporation. (2024). Housing market outlook: Spring 2024. Retrieved from https://www.cmhc-schl.gc.ca
- Statistics Canada. (2023, November 6). A look at loneliness among seniors. https://www.statcan.gc.ca/o1/en/plus/4881-look-loneliness-among-seniors
About the Author
The Decision Lab
The Decision Lab is a Canadian think-tank dedicated to democratizing behavioral science through research and analysis. We apply behavioral science to create social good in the public and private sectors.
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