Small-Scale Housing Projects Are Gaining Ground Across Canada

Small-scale housing projects are becoming an increasingly important source of new homes in Canadian cities, helping add housing in established neighbourhoods where undeveloped land is scarce. These projects include basement suites, backyard homes, duplexes, triplexes and small apartment buildings with up to eight units.

In Toronto, small-scale infill accounted for 6.45% of all housing starts in 2025, up from just 0.62% in 2023. Although the share remains relatively modest, the increase highlights how smaller developments are gaining ground even as the broader housing market slows.

The trend is also evident elsewhere. In Vancouver, small-scale infill grew from 13.22% of housing starts in 2023 to 18.07% in 2025. Edmonton recorded an even sharper increase, rising from 9.95% to 23.28% over the same period. Calgary has also experienced strong growth in this type of construction.

Ontario has generally seen slower adoption, partly because housing construction has weakened in recent years. However, Toronto’s growing contribution from small-scale projects suggests that these developments can continue to expand even when overall building activity loses momentum.

With limited vacant land available, adding homes to existing residential properties is becoming a practical way to increase housing supply. Rather than relying exclusively on high-rise towers or large new subdivisions, cities can create additional homes within neighbourhoods that already have roads, utilities and other infrastructure.

In Toronto, converting existing residential properties into buildings with multiple units has emerged as a leading form of so-called “missing middle” housing. These projects provide more homes than a traditional detached house while generally remaining smaller than large apartment developments.

During the first half of 2025, more than four times as many units were started through residential conversions as through new single-detached and semi-detached homes built on new foundations combined. Unlike high-rise construction, which tends to concentrate in downtown areas, these smaller projects can be spread throughout established neighbourhoods.

Changes to municipal zoning rules have helped support this shift. In 2023, Toronto began allowing residential properties in eligible areas to accommodate up to four units without requiring individual zoning changes. Permissions have since expanded in parts of the city to allow buildings with five or six units.

These reforms make it easier for property owners and developers to add housing where existing rules once limited properties to a single home. Similar municipal and provincial policy changes across Canada have helped make small-scale developments more viable.

Nationally, small-scale infill accounted for approximately 10% of all housing starts in 2025. Its share had been declining before 2023 but then increased sharply, surpassing its 2016 level. The shift coincides with housing initiatives and planning reforms designed to encourage municipalities to approve more homes and allow additional units on properties traditionally occupied by one household.

The growth is particularly significant because construction of single-detached homes has been declining since 2016. Small-scale infill has helped offset some of that reduction, providing another way to add housing without depending entirely on large developments.

However, smaller projects remain only part of the picture. Developments containing nine or more units accounted for approximately 63% of housing starts on previously developed land in 2025. Overall, the share of housing starts taking place on land that had already been developed reached 60.17%, compared with 54.5% a decade earlier.

The figures point to a gradual change in how Canadian cities are accommodating growth. Instead of relying solely on new subdivisions at the urban fringe or large condominium towers, communities are increasingly looking to existing neighbourhoods for additional housing.

Small-scale infill will not solve Canada's housing shortage on its own. Construction costs, financing, permitting timelines and local infrastructure capacity can still make projects difficult to deliver. Nevertheless, allowing more homes on existing residential lots creates opportunities to expand supply in places where people already live and want to remain.

As cities continue to face affordability pressures and limited land availability, these smaller developments could become an increasingly important part of the country's housing strategy, helping neighbourhoods accommodate more residents while making better use of existing urban space.