Community Attitudes and the Future of Housing Innovation: What Planners, Developers, and Homeowners Think

Insights from Municipal Planners

Municipal planners play a crucial role in shaping the housing landscape, from regulatory oversight to community engagement. To understand their perspectives on accelerating housing growth, we interviewed 28 municipal officials from urban and rural jurisdictions in Canada. Our discussions explored how municipalities approach housing innovations, the barriers they face, and strategies employed to facilitate housing growth.

Municipal Strategies for Supporting Development

Most municipalities position themselves as open to supporting new development, actively working to streamline regulatory processes to enable housing projects. One effort is intentionally structuring policies to attract developers through low fees and fast processing times for multi-unit residential projects or targeted incentives for projects like ADUs.

In response to the housing crisis, some municipal representatives have embraced a pragmatic, flexible approach to permit approvals and suggested relaxing costly requirements. As one municipal planner candidly put it, “I make a lot of people on the team uncomfortable with some of my decisions because I'm fairly permissive, but you know, we're in a crisis; we can't ask them to build Ferraris. We need Camrys, for crying out loud.”

Even in cases where proposed developments are just not feasible from a regulatory perspective, municipalities say they try to work with developers to find solutions rather than just saying ‘no.’ A municipal planner shared, “We are honestly very open for business and to help people who want to build in the community, want to invest in the community…We’ll listen to any harebrained idea you have and then hopefully try to make it work for you.”

Key Barriers to Housing Supply

Despite municipalities’ efforts to create an environment conducive to development, municipal planners acknowledged that certain systemic barriers hinder the ability to scale up the housing supply. The main challenges can be classified into three categories: barriers linked to increasing density, market condition barriers, and regulatory barriers.

Barriers Related to Increasing Density

While most municipalities support gentle density, they face physical, social, and political constraints.

• Infrastructure constraints: Limited critical infrastructure to support new development can be attributed to municipal capacity constraints. According to them, many housing projects are stuck in limbo due to deficits in water, wastewater, and transportation networks. Furthermore, there is a decreased infrastructure investment risk tolerance among developers due to perceived market uncertainty.
• Community resistance: Another barrier is community resistance that drags out approval processes, especially for affordable high-density housing projects, creating significant risk for developers. Misinformation and NIMBYism (“not in my backyard” attitudes) create political risks for municipal leaders that lead to delays or, sometimes, policy reversals and oppositions. 
• Land availability: Rural areas must be densified to increase the housing supply, but this conflicts with community expectations of rural living. Some Territories face a shortage of privately held land, and releasing land for development is a lengthy bureaucratic process. 

Barriers Related to Market Conditions

Municipalities rely heavily on developers to build affordable housing, but developer decisions are dictated by the market.

• Developer decisions: According to municipal planners, developers are not producing diverse, affordable housing because of profitability issues or a perceived lack of demand. Due to demand uncertainty, introducing a new housing type to an area or developing in smaller areas is perceived as a risk for developers.
• Financing and funding: Developers struggle to obtain private funding for middle housing and opt for smaller projects to reduce funding risks. Municipalities believe it is the senior government’s job to incentivize and fund affordable housing. However, these developments simply don’t happen when developers rely on private funding.
• Construction costs: Approved projects are not progressing due to increased material, labor, and borrowing costs. Municipal development fees contribute to rising costs but are vital for infrastructure.

Barriers Related to Regulatory Processes

Finally, reducing regulatory barriers is a tractable opportunity to promote housing development. However, updating zoning policies where they exist or relaxing building codes requires careful trade-offs.

• Safety and costs: According to municipal planners, there is a balancing act between flexibility in building requirements and protecting residents’ safety with high-quality buildings. Building code requirements also create high costs that make some projects not feasible.
• Capacity constraints: Stretched municipal resources reduce internal support for change and increase application processing times. 

Key Levers and Opportunities 

To create an environment that better enables housing growth, our research highlights five key levers:

1. Government support for density: Conversations with municipal planners highlighted the critical role of government leadership and funding support. Municipalities described how the Housing Accelerator Fund not only helped them fund infrastructure development but also generated political backing to fast-track zoning changes. Importantly, the funding also helped them counter anti-development pressure from the community.
2. Tackling NIMBYism: We talked to Canadian homeowners and residents and found that community opposition is the result of a loud minority rather than a widespread majority, suggesting that addressing NIMBY also means elevating the voices of those not speaking up. Aside from communication strategies, political will within councils to prioritize housing issues can also help navigate community opposition.
3. Incentivization for developer innovation: Our research with developers shed light on how funding incentives, such as CMHC mortgage loan insurance products, can influence their decision-making. These make it financially worthwhile for them to adopt innovative housing solutions to meet eligibility requirements. This responsiveness to financial mechanisms can be leveraged to drive adoption at a larger scale.
4. Demand stimulation: Developers build in response to consumer demand, so shifting preferences can directly influence what gets built. One municipality, for example, expressed its intention to support middle housing in its area, but “it's just not something that we've really seen pressure to start occurring yet.” Municipalities (and other orders of Government) can help reshape market dynamics and consequently shift developer decisions by addressing barriers to the demand for innovative housing solutions. This can be through promoting new and diverse housing options, addressing misconceptions, and ensuring that homebuyers and renters see value in them.
5. Senior government leadership: Clear directives and leadership from higher levels of government are crucial for addressing regulatory barriers. While it can be uncomfortable for some municipalities, it can help catalyze or fast-track zoning changes. For example, municipal representatives across BC mentioned zoning changes that had occurred in response to provincial requirements to increase the number of permitted units per lot.

Insights from Municipal Planners Summary: The crucial role of the relationship between the senior government and the community 

The ability of municipalities to tackle systemic issues in housing supply is closely linked to support from two key groups: senior government and the community. These stakeholders influence one another. For example, senior government backing, particularly through funding programs such as the Housing Accelerator Fund, allows municipalities to meet infrastructure needs, addressing a significant development barrier. Simultaneously, senior governments play a crucial role in shaping the regulatory environment. There is an opportunity for senior governments to impact building code requirements that can drive up costs.
Support from senior government fosters political will among municipalities to pursue innovative housing solutions and provide tangible benefits. In turn, municipalities can offer communities something valuable in exchange for densification, thus encouraging community support.

However, municipalities recognize that even the most well-designed and well-funded housing developments will struggle if public opposition remains high. When residents actively support—or at least refrain from resisting—new housing developments, it removes a major roadblock to the approval processes. Furthermore, communities foster development by creating demand that encourages developers to diversify and adopt more innovative housing offerings. While federal funds clearly serve as a lever for diversification, there’s an opportunity for all levels of government to influence demand and address community opposition.