“This is boring to Europe because this could go anywhere on a lot with a ground floor commercial unit,” said Conrad Speckert, a housing designer and building code researcher, as he showed off a set of technical drawings he helped design for Toronto-based LGA Architectural Partners.

But in most of Canada, building codes generally require two sets of exit stairs for apartment buildings of more than two storeys. The main concern is allowing people out in case of fire, especially if one exit becomes unviable.

Yet with features such as sprinklers, smoke-sealed doors and more reliable fire alarm systems, mid-size apartment buildings can be just as safe, several studies have concluded. In other countries, single-stair apartment complexes are common. In Seattle, single stairways have been allowed for smaller buildings since the 1970s.

Dual-stairway rules are just one example of a cacophony of provincial and municipal restrictions and requirements that have long made it hard in Canada to build livable apartments – the kind many people would consider suitable to be long-term homes in big cities.

Yet with detached houses increasingly out of the reach of middle-class homebuyers even in far-flung suburbs, there’s a growing consensus among experts that building apartments that can be desirable homes, including for families, is a key part of tackling the country’s housing crisis.

Some of those efforts have led to high-rise projects that feature anything from indoor common playgrounds and daycare centres to shared harvest gardens and music rooms. Yet units in these structures mostly remain small.

The better solution is adding gentle density to residential neighbourhoods, said Mike Moffatt, an economist and founding director of the Missing Middle Initiative, which conducts research on housing affordability at the University of Ottawa. Creating larger apartments is easier and cheaper in multiplexes or small apartment buildings.

Provinces and cities have started to undo the knot of rules and guidelines that have – often by design – inhibited or prohibited the construction of apartments in or near areas dominated by detached and semi-detached homes.

But that push continues to meet political opposition. Toronto city council recently balked at the idea of allowing buildings of up to six units everywhere, restricting the change instead to parts of downtown and a single ward in suburban Scarborough.

And even when smaller multiunit buildings are welcome on paper, a flurry of other bureaucratic obstacles makes it difficult to build them. The challenges include overly strict limits on size, requirements for exorbitantly large and expensive elevators, high taxes and permitting costs, and the dual exit-stair requirement that Mr. Speckert and others have been battling.

Cities must reform how they build apartments, along with other medium-density housing, if they want to help secure their own economic viability, says Prof. Moffatt.

“You can’t have all of the older, rich people living in Toronto, but all the nurses and personal support workers living in North Bay, right?,” he said.

“You look at places like the San Francisco Bay Area, where the schools can’t find teachers, to see what happens ​​when you reach that level of housing inequality.”

Tiny apartments: Not just investors’ fault

For the better part of the past 15 years, “apartment” in Toronto and Vancouver became another word for condo unit in a glass tower. It also, increasingly, became synonym for tiny living space: often less than 640 sq. ft., sometimes under 300 sq. ft. – just enough to fit a pullout couch in front of the kitchen.

It’s a sharp contrast with big cities elsewhere in the world, where apartment living is mainstream among middle-class and even upper-middle-class families. In locales as disparate as Bogota, Colombia; Vienna, Austria and Milan, Italy, it’s easy to find apartments of 1,300 sq. ft. or more, although even there, newly built apartments are often smaller than the older housing stock.

The layouts can vary significantly – Italians, for example, tend to have eat-in kitchens, while Austrian homes have water closets that separate the toilet from the rest of the bathroom. But the common denominator is space.

So why has Canada been building such tiny dwellings? One theory is that, for years, a heavy presence of real estate investors in the condo market has incentivized developers to build small.

Take Toronto, for example. At the height of the city’s condo craze, investors owned at least 60 per cent of new condos.

And as their presence grew, condo sizes shrank. The median living area of newly built condo units went from 947 sq. ft. in the 1990s to 640 sq. ft. after 2016, according to data from Statistics Canada. In Vancouver it similarly declined from 912 sq. ft. to 790 sq. ft.

In both cities, developers relied mostly on investors to secure the purchase commitments necessary to obtain funding for a new project. Investors would put down a deposit on preconstruction units, with the goal of eventually renting the property or, often, selling it at a profit when or after the building would be completed.

Smaller units were popular with mom-and-pop investors because they required smaller upfront payments and mortgages, and they usually yielded higher rents per square foot.

But a different set of housing statistics suggests condo investors are only one part of the story.

Investor interest in condos began to falter in the spring of 2022, as rising interest rates started pushing up borrowing costs for homebuyers and builders.

Recent curbs to immigration have also tamed housing demand just as a slew of newly built units – condos and rentals – hit the market, leading to rent declines and further scrambling the math of condo investing.

Today, sales of new condos in the Greater Toronto and Hamilton Area, which has seen the deepest slump in Canada, are at 35-year lows. Many developers have pivoted to building purpose-built rental apartments, which are meant solely for long-term rental use and enjoy generous government subsidies such as cheap loans and tax incentives.

Purpose-built rental construction also needs private capital, but the investor calculus is different. Rentals require significant upfront funding and promise returns that materialize only over the long term, as rents are collected. They typically attract investment from patient, deep-pocketed investors such as pension funds.

Yet, Canada is still, by and large, building small apartments.

Only 13 per cent of rental units completed in the GTHA in 2024 were three-bedroom apartments, according to real estate research firm Urbanation. And that share was in the single digits in the previous four years.

For Prof. Moffatt, the numbers are proof that the problem of small apartments goes beyond condo investors. Three-bedroom apartments remain rare because they’re difficult to build in large buildings, he said.

On a per-square-foot basis, three-bedroom units generally command lower rents compared to smaller apartments. As with condos, developers are better off building, say, a one-bedroom and a two-bedroom instead of a larger three-bedroom.

Bigger apartments are also harder to rent because they are so expensive, said Brandon Donnelly, partner at Globizen Group, a real estate developer.

Rental directories in Toronto and Vancouver show advertised rents of between $4,000 and $5,000 for newly built three-bedroom apartments.

“At $5,000 a month, you can also support a fairly large mortgage, right?” said Mr. Donnelly.

At current interest rates, that would be enough to cover the mortgage and monthly expenses on a $850,000 home with 10 per cent down and a 25-year amortization.

It’s a similar dilemma for condos. Larger ones easily cost around $1.5-million. For that much money or less, buyers could purchase a townhouse further from the city core or a home in the suburbs, and many of them opt for the longer commute, he added.

A different kind of apartment

In Vancouver, Bryn Davidson, co-owner and design lead at Lanefab, is facing a different set of challenges when it comes to apartments.

Mr. Davidson’s focus is on much smaller buildings of just a few floors and units – multiplexes and larger structures that could fit on standard residential lots all over the city.

Those types of buildings are where he envisions the ideal children-friendly apartments.

At 1,200 sq. ft., those units would be big enough to fit three bedrooms and two bathrooms. Ideally, some could be even larger.

“Twelve-hundred to 1,800 square feet is the unicorn size,” he said.

There are many reasons why those units remain unicorns. One is zoning, which regulates what can be built where. Cities in Canada and the United States have had tight restrictions for residential neighbourhoods for the past 50 years or so: Multiplexes have rarely been allowed.

Instead, local bylaws have typically relegated apartments to large buildings in crowded downtown cores and along busy major roads. Largely, they’ve been meant to be home to high-flying young professionals at best, or second-rate housing segregated along racial and class lines at worst.

With the housing crisis creating mounting pressure on provincial and municipal governments to allow for more types of residential buildings than just detached homes or high-rises, zoning laws are beginning to change.

British Columbia, for example, now allows buildings of up to four units on land that was previously zoned for detached homes, and up to six units near bus stops. Vancouver allows condos, called strata in B.C., of up to six units and rentals of up to eight units on a single lot.

Last year, Ontario began to allow triplexes on a single property as a common lowest denominator for cities across the province. Toronto approved fourplexes on residential land and, recently, up to six units per lot in some areas of the city.

But the dial hasn’t moved far enough yet, according to Mr. Davidson. Cities, for example, are still often imposing strict limits on how big a multifamily building can be compared to the lot it’s built on. The unit of measure is called floor space ratio, or FSR, obtained by dividing the total floor area of a building by the area of the lot.

In Vancouver, Mr. Davidson said his firm regularly runs up against FSR caps when evaluating whether a new multiunit building on a single lot is financially viable.

For example, he said, take a 6,100 sq. ft. lot, a large but still common size in Vancouver. The city’s current density cap for multiunit buildings is one-to-one FSR ratio, meaning a maximum floor space of 6,100 sq. ft.

That could fit anything from a triplex with units of just over 2,000 sq. ft. up to a sixplex with units just above 1,000 sq. ft. Mr. Davidson estimates the units would sell for around $1,050 per sq. ft., based on current prices for new construction. For a total of around 6,100 sq. ft. in floor space, that would work out to roughly $6.4-million in revenue for the entire building.

Building the multiplex would cost around $3.33-million, including construction, permitting and financing costs. And the project would require at least $730,000 in profit, the minimum required for a builder to secure the necessary loans from lenders. That would leave around $2.3-million to purchase the land.

That’s where the math often stops working, according to Mr. Davidson. While it’s possible to find properties on lots of that size on sale for $2.3-million in some areas of the city, many are far pricier. In other words, density caps are still too low given current land prices for single-lot multiplexes to be financially viable in large swaths of the city.

At around $1,000 per sq. ft., the apartments Mr. Davidson envisions would cost roughly as much as a townhouse.

But townhomes usually take up whole city blocks and tend to be built along busier streets. For larger apartments in single-lot, multiunit buildings, according to Mr. Davidson, the comparative advantage would be location: The quiet, leafy streets that have long been the almost exclusive purview of detached homes.

But there’s another well-known obstacle to building bigger multifamily buildings filled with spacious units: stairs.

Stairs, elevators and other building code woes

As in the main street apartment complex sketched out by Mr. Speckert, the requirement for two sets of exit stairs would make it impossible to fit large units in the small apartment buildings envisioned by Mr. Davidson.

Here too, things are slowly changing. A little more than a year ago, B.C. updated its building code to allow single egresses in smaller residential buildings of up to six storeys.

The upcoming 2025 edition of the National Model Codes, which serve as templates for the provinces and territories for how buildings should be designed and built, will not include changes for single-stairway construction, according to the Canadian Board for Harmonized Construction Codes, which drafts the codes. Any such changes may be considered for future updates, it said. (Code updates occur every five years or so.)

Dual-egress rules are a symptom of a larger issue with Canada’s building codes, said Prof. Moffatt.

Canada has two distinct sets of rules that govern how buildings must be designed and constructed. One applies to houses and small buildings of up to three storeys. The other applies to anything bigger but is really designed with very large apartment complexes in mind, he added.

“We’re lacking building code provisions that make sense for missing-middle housing,” the kind of smaller multiunit housing Canada has so far largely failed to build, he said.

Elevators are another example of the problem. Canada, along with the U.S., typically has much larger and more expensive elevators than other countries for residential buildings.

In North America, elevators are larger to better accommodate people with disabilities or ambulance stretchers. But this has resulted in more residential buildings with no elevator at all, according to a report by the Center for Building in North America.

Costs are also far bigger in North America, in part because standards far different from those used across much of the rest of the world have protected Canadian and U.S. elevator industries from foreign competition, according to the study. The price tag for installing a basic elevator in a mid-rise building in New York costs more than $200,000, the same research found. In countries such as South Korea and Switzerland, it is routinely done for less than $70,000.

Elevators eat up far too much of the floor space and construction budget of smaller apartment complexes in Canada, said Mr. Davidson. It’s another example of a cost consideration that can lead developers to build townhouses or taller apartment buildings instead.

Digging into the math of residential construction makes it clear that Canada needs zoning and building code reforms if it wants to see bigger apartments sprouts up across its cities, according to Mr. Davidson.

“You don’t get there with just the code change or just the zoning change. You need these things to work together.”

Amenities, permits and taxes

The math is a problem even for larger apartment buildings, such as the six-storey complexes Toronto recently greenlit along avenues across the city without the need for a lengthy permitting process.

Mr. Donnelly’s firm, Globizen, is pivoting from a focus on high-rise development to one on mid-rise buildings. But finding projects that pencil in is a challenge.

There’s the cost of cobbling together several lots. Then there are amenities such as gyms, lounges and community gardens. Cities usually want to see them in multiunit buildings, but they take away from sellable or rentable floor space, eating into revenues.

Even without the need for rezoning, the cost of permits and consulting fees easily adds tens of thousands of dollars to the cost of building a smaller multiunit building, depending on the complexity of the project, said Blair Scorgie, a Toronto-based urban planner.

Mr. Scorgie said he’s currently involved in about a dozen projects to develop six-storey purpose-built rentals on major streets. But, mostly, he’s working with investors who have long owned the land or have purchased it recently using their own funds.

“They’re not borrowing millions of dollars from lending agencies to acquire the land,” he said.

And then there are taxes. Cities apply an assortment of fees, the bulk of them known as development charges, to the construction of new homes. The levies are meant to help cover the expense of supporting new housing – anything from new roads to larger sewers.

In Toronto, development charge rates have risen by almost 600 per cent between 2011 and 2023, far surpassing population growth rates, according to a report by BILD and the Ontario Home Builders’ Association, two builders’ lobby groups. Today, the cost of such fees for homebuyers is estimated at more than $130,000 for a single-family home and around $80,000 for a two-bedroom condo.

It’s a similar story in Vancouver. Soaring government charges have been a main driver of what Brad Jones, chief development officer at Wesgroup Properties, calls a cost of delivery crisis.

“Even if the land were free and we made no profit, just the pure cost of executing a project is higher than any traditional measure of affordability,” he said. “And right now, in many cases, it’s higher than what the market will bear.”

Consider a mid-rise building of just under 70 apartments, for example. In a sample calculation provided to the Globe and Mail, analysts at Wesgroup estimated a two-bedroom unit of 742 sq. ft. would cost around $1.1-million, net of federal sales taxes. (Buyers often pay sales taxes on newly built homes, but the Carney government has proposed a new federal rebate for first-time homebuyers on properties worth up to $1.5-million.)

The cost is far over the current market price of around $850,000. And that’s using wood frame construction, which is cheaper than building with concrete and steel.

Development fees alone would account for more than $126,000, or 11 per cent, of the unit’s total building costs.

Even without lowering development charges, cities could lower building costs – and save thousands, if not tens of thousands, for homebuyers – by allowing payment at project completion, rather than before shovels hit the ground, reckons Prof. Moffatt.

The change would exclude the fees from the upfront expenses developers typically must cover with loans, and would reduce a project’s overall financing costs.

Added savings would come from the fact that a smaller pretax price is used to calculate the 5-per-cent federal sales tax that homebuyers must often pay on new housing, along with other provincial taxes.

In the example provided by Wesgroup, levying development charges at the end of the project would shave almost $8,000 off the cost of the two-bedroom unit for homebuyers.

Combining that with other cost-saving options, such as a European-sized elevator, doing away with common amenities and switching from three floors of underground parking to a single-level lot, would lower the unit price by around $81,000. (Reducing the cost of the unit below $1.1-million would also allow homebuyers to qualify for an exemption from B.C.’s property transfer tax, which would save them more than $5,000.)

Not just more homes, but better ones

It has taken the formidable pressure of the current housing crisis for governments at all levels to muster the courage to begin to change the policies that for decades have effectively precluded the construction of relatively affordable and comfortable homes – in multiplexes and smaller apartment buildings – in cities’ coveted residential neighbourhoods.

But the sum of many gradual changes will soon begin to make a difference, said Mr. Scorgie. Despite the existing caveats, Toronto’s decision to allow six-unit buildings on single lots and the law permitting six-storey apartment buildings on major streets have the potential to be game changers, he added.

“We’re starting to actually scale housing,” he said.

And this time, it’s not just about adding homes, but building better ones.