Feeling Unwelcome in a New Home: Unpacking Toronto’s Immigrant Housing Crisis
By Eric Pu
Since the turn of the millennium, Canada has rigorously fought to transform its national identity into that of a country of immigrants. Across all facets of daily life, the stories of immigrants and their struggles are inseparable from Canadian society, which has been described as a “cultural mosaic.” Immigration has also introduced drastic changes to the shape of the Canadian economy, as it battles an aging population and fertility rates below the replacement level—between 2016 to 2021, Canada welcomed 1.3 million new immigrants, which accounted for 80% of growth in the labor force. As of 2021, first-generation immigrants comprise 23% of Canada’s population, the highest proportion in the nation’s history.
Unfortunately, integrating so many newcomers into foreign cities is never a seamless process. Over 90% of immigrants in Canada reside in urban centers of over 100,000 residents, and no city bears a greater share of this burden than Toronto, which welcomed 29.5% of Canada's immigrants in 2021. While global news outlets have been captivated by the ongoing migrant crisis in New York, relatively little attention has been paid to concurrent challenges in its neighbor to the north. Beginning in the summer of 2023, hundreds of asylum seekers and refugees were forced to sleep on the streets of Toronto upon their arrival due to the collapse of the city’s shelter system. Similar to New York, Toronto’s housing crisis has been blamed as the root cause of this humanitarian catastrophe, which only scratches the surface of a highly concerning trend that has ravaged most Canadian cities over the last decade. Chronic housing shortages and skyrocketing home prices have led to a housing affordability crisis in Toronto, with the dream of home ownership becoming entirely out of reach for many immigrants. A growing share feel that they have been left with no other choice but to abandon Toronto altogether, in pursuit of other regions with more affordable housing—this sentiment is especially pervasive among new immigrants, the lifeblood of the modern Canadian economy.
Although Toronto’s recent housing woes have been detrimental for both renters and home-buyers, this memo will focus on the latter for a number of reasons. Firstly, price data by neighborhood is more robust for home sales than rentals. Furthermore, these two markets are interconnected since apartments and detached houses are substitute goods—between 2021 and 2022, the average rent in Toronto rose by nearly 23%. Lastly, and most importantly, census data reveals that after taking income into account, immigrant home ownership rates in Canada tend to be significantly higher than for non-immigrants, implying that immigrants devote a larger portion of their financial resources towards housing. This is supported by the fact that home ownership is generally seen as an important milestone for immigrants (as a symbol of having entered the middle class), and is oftentimes their primary means of building wealth since capital gains on homes are not taxed—among the 8.5 million Canadian households with incomes below $56,495, housing represents nearly half of their collective net worth.
Based on real estate data from June 2018 to June 2023, the median home sale price in Toronto rose by over 35% to $925,000 over that five-year period, 11 times larger than the city’s median household income of $84,000. However, although the housing crisis has impacted virtually every neighborhood of Toronto, certain parts of the city have been disproportionately affected by such trends—these corresponding communities can generally be characterized as highly diverse ethnic enclaves located in Toronto’s outskirts/inner suburbs, and their residents tend to be lower income immigrant families. In 2018, 9 out of the city’s 35 real estate districts had median home prices below 85% of the citywide median, but by 2023 that number had shrunk to just 5 districts. The aforementioned 9 districts saw prices rise by an average of 57.4% since 2017, compared to just 30.5% across all districts. This implies a convergence in home prices between city districts, potentially indicating that home-buyers are becoming less picky about location out of desperation for home ownership, which leads to displacement as immigrants are priced out of home ownership in their own neighborhood. 7 of the aforementioned 9 districts are no longer below 85% of the city median, and are classified as “No Longer Affordable” (or NLA), representing the neighborhoods where this recent surge in home prices has been the most heavily concentrated.
Median home price data for the 7 “No Longer Affordable” (NLA) Toronto housing districts (Data Source: Toronto Regional Real Estate Board).
The demographics of Toronto’s 7 NLA districts reveals some commonalities between neighborhoods most hurt by the housing crisis, including lower household incomes, higher visible minority/immigrant populations, and higher levels of single-family housing (which is indicative of zoning restrictions limiting housing supply and thus affordability) compared to the city average. This corresponds to the fact that NLA neighborhoods tend to be home to a variety of ethnic enclaves (e.g. Willowdale is 19.3% Chinese, 9% Iranian, and 7.9% Korean). Many of these communities have consequently become immigrant hubs, and since new immigrants tend to be the most vulnerable when it comes to higher housing costs, a special level of priority must be assigned towards addressing housing affordability in such districts.
Demographics data on Toronto’s 7 “No Longer Affordable” (NLA) housing districts (Data Source: City of Toronto).
Toronto’s housing affordability crisis poses a serious threat to the future of immigration in the region, as many newcomers are already being alienated from the city. One news article describes the story of a Ukrainian family that immigrated to Toronto in 2016 but was unable to afford a home within city limits, choosing to buy a house in Kitchener (a city more than 60 miles away from Toronto) instead. A few years later, they packed their bags once again and traded their Kitchener home for one in Alberta, now with a monthly mortgage payment half of what they paid in Ontario. This story is just one of many for Ontario residents, as a 2021 report states that 77% of Ontarians felt that it had become increasingly difficult to purchase a home in their community over the past year, and 30% of those surveyed had given up entirely on ever being able to afford a home in their community. These problems are especially prevalent among new immigrants, 46% of whom had considered moving to another province in the past year due to housing affordability, compared to just 27% for all Ontario residents; 54% of new immigrants also considered moving to a smaller community outside the Toronto area, compared to 38% of all Ontario residents. Given that the economy of Toronto is highly dependent on high volumes of immigration, the housing affordability crisis presents an existential threat to the long-term prosperity of the region.
A plethora of different policy failures have been blamed as leading causes of Toronto’s persistent housing shortage, concerning both supply and demand. Many Canadians have begun to argue that immigrants are partially responsible for the continued rise of home prices, and the 431,645 newcomers that entered Canada in 2022 certainly does have an impact on housing demand. However, policymakers have placed little weight on this theory for a myriad of reasons, primarily because the economy of Canada is dependent on this continuous stream of new workers, and it is often immigrants themselves who are employed at construction sites building new homes. There is a general consensus among Toronto housing experts that the issues actually lie on the supply side of housing, citing zoning, bureaucracy, and NIMBYism as blocking the necessary development of new homes. Prior to 2023, 62.3% of Toronto’s residential land was zoned solely for detached, single-family dwellings, mostly in the city’s outer areas of Etobicoke, Scarborough and North York, where all 7 NLA districts are located. Fortunately, Toronto city council recently voted in favor of legalizing multiplexes of up to 4 units in zones that previously only allowed single-family housing. This change will be instrumental in combating the chronic housing shortage, but even its biggest proponents admit that more measures will be necessary to achieve Toronto’s goal of building 285,000 new homes by 2031.
A pre-2023 map of Toronto’s zoning, where 62.3% of land permitted detached housing only (Image Source: DataLabTO).
Perhaps the biggest issue is that many neighborhoods in Toronto, including several NLA districts, already have the transportation infrastructure necessary to support higher levels of density, but zoning laws have prevented the market from building new housing according to demand. A shortage of multi-family zoning has resulted in Toronto’s developers prioritizing the construction of luxury condominiums towers in order to maximize profits with limited land, a development pattern that is often considered “damaging to the character of the neighborhood.” From 2007 to 2018, Toronto gained 93,301 new rental units, almost all of them (88,812 units) being condos. These trends are indicative of a market failure often referred to as the “missing middle” of housing, where zoning restrictions create polarizing housing markets of exclusively single-family detached homes or hyper-dense condo towers, with no alternatives in between.
A street-view photo of single-family detached housing located directly across from tall condo towers, 4 blocks away from the Finch subway station along Toronto’s Yonge St (Image Source: Google Maps).
A zoning map near Yonge and Finch, along the Yonge subway line (Red = Commercial Residential, Orange = Residential Apartment, RD & Yellow = Residential Detached, Green = Open Space/Parks) (Image Source: City of Toronto).
The two images above illustrate an example of Toronto’s “missing middle” near Yonge & Finch in Willowdale (part of the C14 NLA district). All of the mixed-use zoning is located along the Yonge subway line, and almost all the surrounding land is zoned solely for single-family detached housing despite being close enough to the subway station to support substantially higher levels of density. This is just one of many neighborhoods with robust public transportation infrastructure but insufficient density due to zoning restrictions, which artificially limits housing development and leads to local supply shortages. Thus, the most obvious solution would be to up-zone Residential Detached zones into Residential Apartment or Commercial Residential instead, allowing for higher housing density which should hopefully lead to the construction of new housing stock and an improvement in housing affordability.
Ontario Premier Doug Ford’s Housing Affordability Task Force makes similar recommendations, blaming zoning along with red tape as primary causes of the housing crisis—their 2022 report states that Canada’s building project approval process is the 2nd slowest among OECD countries, with approval times averaging between 20-24 months in Ontario’s cities, plus an additional two years for building permits. They cite overcomplexity in the planning process, redundant and poorly coordinated reviews, studies, guidelines, meetings, and other requirements as the sources of this bureaucracy, coming at the expense of housing affordability. The Task Force’s 7 recommendations pertaining to bureaucracy (out of 55 in total) include streamlining the process, tightening processing deadlines, and simplifying planning legislation. On top of bureaucratic challenges, new housing developments are very often challenged by local community members through NIMBYism, mainly concerning the potential decline in value of their own property. The province provides 4 recommendations to combat NIMBYism, which includes making sweeping changes to municipal policies and plans to reduce the need for community consultation, and setting limitations on the number of public meetings.
While it is true that some immigrants in NLA districts have much to gain from rising real estate prices, since their home ownership rates tend to be higher than the city average, this phenomenon is highly unsustainable. When home ownership is out of reach for the typical immigrant household, the only party that stands to reap the rewards from rising home prices are those who were fortunate enough to enter the market early, whilst everyone else suffers. Preventing new immigrants from purchasing homes means preventing them from accessing their primary means of building generational wealth, putting them at a serious disadvantage. Data from 2022 reveals the share of housing in the possession of multiple-property owners has risen to 31% of Ontario’s homes, showing that the status quo will only further exacerbate already severe levels of inequality in Toronto.
Ultimately, if Toronto wishes to continue promoting itself on the global stage as a city of immigrants, then it must properly address its housing crisis with utmost priority. Skyrocketing home prices have a disproportionately larger impact on lower income, diverse communities that have long been hotspots for new immigrants. Many new immigrants are feeling pessimistic about their future in Toronto under the status quo, oftentimes leaving the city or province entirely in pursuit of cheaper housing elsewhere in the country. This presents a serious threat to the economic and cultural longevity of Toronto, and will only further intensify inequality throughout the region. Fundamental changes to the city’s zoning, development approval, and community consultation processes will be necessary in order to remedy persistent housing shortages in Toronto’s booming real estate market.
Eric Pu is a senior at New York University, studying economics and public policy. Hailing from Toronto, Canada, he is deeply interested in urban planning and the unexpected consequences that city amenities have on the daily lives of millions of residents.
