Affordable housing

Homelessness is not a new problem, but it is growing more visible and more urgent in communities across Canada. This issue has worsened through decades of underinvestment in housing, yet the past several years have intensified the crisis and brought it to the forefront for many Canadians. Homelessness has a devastating impact on individuals, families, businesses, communities and service systems. More than ever, governments and communities need to collaborate on solutions grounded in sound evidence and policy. This is a challenging space in which an advisor like KPMG can help to chart a shared path forward.

Over the past several years, several conditions have exacerbated the homelessness crisis in Canada. Our experience with the COVID-19 pandemic, inflation, economic disruptions, and housing shortages from coast to coast has placed increasing pressure on social services and rental markets. Encampments have emerged as a huge issue locally – and not just in Canada’s biggest cities. People are voicing concerns about social disorder and safety related to encampments and street homelessness. With few “quick fix” solutions at their disposal, communities across the country are grappling with a growing and increasingly visible homeless population.

We’ve known for decades that the cure for homelessness is, quite simply, housing. The “Housing First” approach has risen to prominence as an evidence-based way to help people access affordable housing with the services that they need to stay housed. And it works. But there are too few affordable units, and too few services available to meet demand. Canada’s National Housing Strategy and local initiatives are making important strides. Still, recent experience suggests that these commitments haven’t led to housing stock, funding and support coming as quickly as needed. This means continued and growing pressure on emergency services and shelter systems that can only react to the crisis, not solve it.

Fragmented systems and persistent stigma around homelessness marginalizes those impacted and creates barriers to access. While street homelessness and encampments are often viewed through a crime and disorder lens, the situation is more layered and complex. There’s a clear need for an approach that both rises above stigma and that integrates the existing, highly fragmented systems into a more cohesive response. Here’s an overview of the opportunities and challenges across different orders of government:

The federal government has earmarked additional funding under the National Housing Strategy to address housing supply issues and coordinate responses to the homelessness crisis across the country. However, challenges persist in building new affordable and deep-subsidy units quickly.

Provinces have the lead responsibility for housing, as well as many of the necessary support services. However, these systems, including hospitals, shelter, justice, mental health, and income support, don’t typically act in concert, and their focus on prevention is limited.

Municipalities are at the frontline in dealing with encampments, encouraging construction of more housing units, and responding to individuals and families who lack housing. Municipalities lack sufficient capital to address housing supply or sufficient scope to make all the systems work together. Mental health, addiction and behavioral supports, and other specialized resources are vital for addressing the trauma and complex needs of people experiencing chronic homelessness. However, the available local services often lack the right tools for the job. Relying on bylaw officers, park rangers, police, fire, and EMS as a response strategy isn’t just expensive; it can also disrupt lives and services even further, without solving the underlying problem: typically people who have been ticketed, arrested, hospitalized, or displaced still have no safe place to live.

At the community level, supports are often a patchwork. Local planning has improved, and communities possess real strength and expertise at helping people get into and stay in housing. At the same time, communities face very real challenges in terms of coordination and capacity. Emergency systems (police, justice, EMS, fire, hospital ERs) face tremendous cost and capacity pressures due to homelessness: a recent study of healthcare costs in Toronto in 2021 and 2022, for example, showed that average 1-year costs for study participants experiencing homelessness were nearly seven times higher than for participants with housing.¹

In addition, emergency systems have little ability to work upstream and help address the broader problems that contributed to the homelessness crisis. As a result, these systems end up serving as a “last resort” for people in crisis who have been failed by other services.

All of these systems, of course, face tremendous cost and capacity pressures from homelessness.

Adding housing is expensive and time-consuming, but municipalities have few options. A provincially mandated shelter program may be an effective stopgap, but more is needed so people can flow out of shelters into social housing. Recent data about shelter capacity in Canada is telling:

In 2024, Canada had 22,379 emergency shelter beds, but only 11,303 transitional housing spaces.² Adding more transitional supports would play a significant role in ensuring that all people in emergency shelters can eventually exit homelessness and find affordable housing.

The best solutions are often community-led, with planning done at the local level. However, an effective response may involve a range of departments, from corrections, health, treatment services, social housing and income support. Managing one part of the puzzle is challenging enough, but fragmentation and competing priorities can leave related issues unaddressed. Well-meaning community groups often can’t push the necessary levers to overcome fragmentation and drive change. Coordination across systems is essential: No single player can solve the homelessness problem alone.

A recent report based on the 2022 Canadian Housing Survey, for example, shows that many people draw on multiple supports when exiting homelessness. While financial factors played the biggest role, other factors (e.g., accessing social services, receiving assistance from a housing agency, receiving employment or life-skills training) contributed to nearly half of all exits from homelessness.³

Lacking funding, decision-makers may feel their hands are tied. However, the consequences of inaction on homelessness can be more costly than investing in housing and homelessness prevention, as shown by the following data:

In 2021, over 16% of people admitted to Ontario’s correctional institutions were experiencing homelessness.⁴
The average hospital stay for patients experiencing homelessness is nearly twice as long (15.4 days) as the national average, and the estimated average cost of that stay was more than twice as high ($16.8K vs $7.8k).⁵
In 2015, the average length of stay in a shelter was 38.7 days. By 2022, this figure had risen to 56.1 days.⁶
In 2024, the average cost for a single night in a Toronto shelter was $136, while the average national rent for a 1-bedroom social or affordable apartment was just $651.^7,8