Micro-housing as an Urban Housing Option

There is a real need for more affordable housing in the Greater Toronto and Hamilton Area (GTHA). The homeless and other vulnerable communities still face significant barriers to accessing such housing. A possible solution would be to create a new type of affordable housing option.

Right now, the supply of housing options in the area consists mostly of ground-related homes and high-rise multi-residential units. Micro-housing or micro-suites are housing units with a private bathroom and kitchen or kitchenette and 29 m² or less. These could be an ideal solution for vulnerable populations who need urgent access to stable affordable housing. 

Project scope and expected outcomes

Micro-housing: a potential solution to urban affordability challenges

Housing affordability is an increasingly important issue across Canada, particularly in the Greater Toronto and Hamilton Area. Rising housing costs, stagnating incomes and limited access to subsidized housing has priced potential homebuyers out of the market. Those same factors have also forced many renters to pay unaffordable rents. Investment in affordable housing by the federal government is creating opportunities to implement alternative affordable housing solutions.

The size of micro-housing means builders could add them to existing neighbourhoods. This would provide new housing within established communities, allowing residents access to necessary services and transportation options. Micro-housing could therefore be an affordable housing option that can help accommodate urban growth demands and demographic changes.

Learning about the realities of urban micro-housing

In 2019, CMHC funded a study to learn more about the realities of implementing micro-housing in urban settings. The research had several objectives:

• Explore the viability of micro-housing as an affordable housing solution
• Identify development planning issues preventing the implementation of micro-housing or micro-suites in multi-unit residential buildings
• Identify building code issues with micro-housing designs
• Identify stakeholder perspectives for the construction of micro-housing or micro-suites within new or existing communities

The focus was on seeing if micro-housing could be implemented in the GTHA. The research looked at other jurisdictions in Canada and the U.S. to see what their experiences had been.

“Micro” doesn’t always mean “affordable”

The study showed that certain regulations tended to raise costs above the profitability threshold. Such regulations included those governing:

• minimum unit size
• the amount of parking spaces
• open and shared spaces
• unit mix

When housing costs a lot to build, those costs get passed on to occupants, making units less affordable.

Micro-housing seemed to be more profitable as non-market community housing and shelters that offer immediate accommodations to vulnerable individuals.

There was also evidence that resale prices for market condominium micro-housing are more affordable than those of conventional housing. Affordability erodes somewhat when units are rented out on the secondary market. This is particularly when they’re bought as investments and then offered as rental accommodation.

Two examples of micro-housing affordability differences are “congregate housing” suites in Seattle and the Carmel Place building in New York. The Seattle example achieved deep affordability by making units very small and having several units share a communal kitchen. Carmel Place, meanwhile, contains larger, beautifully designed suites that were recently being rented at nearly $3,000 per month.

Micro-housing tenants report positive experiences

Some critics of micro-housing focus on its small size and what they feel are the substandard living conditions it provides. However, statistics and individual accounts reveal tenants’ positive experiences and hint at the demand for micro-housing options:

• Post-occupancy evaluations of a Vancouver micro-housing complex were completed. They revealed that 84% of tenants were very satisfied, satisfied or neither satisfied nor dissatisfied with their units.
• Tenants feel that a small living area is an acceptable compromise for affordability, convenient location and not needing a roommate.
• In Toronto, demand for micro-housing is increasing with population growth and as more people live alone.

Next steps for implementing micro-housing solutions

For micro-housing as affordable market rental units, the GTHA should follow the example of other jurisdictions and conduct pilot projects. It’s important to find allies within the community, since opposition to micro-housing projects can slow down or stop development plans.

Micro-housing can reach deep levels of affordability. The challenge is finding the best trade-off between affordability, unit size and amenities, then encouraging the construction of such buildings. This will require further knowledge sharing between jurisdictions and more research.

Whether the issue is affordability, sustainability or density, micro-housing could be a solution to the challenges facing the housing sector.