Margo Wynhofen

• Canada’s federal Finance Minister tabled his second budget on November 5th. As broadly expected, it is a fiscally expansive plan (and then some).
• Budget 2026 carries a final price tag of a $151.2 bn over its five-year planning horizon (FY27–31), while showing a $158.3 bn in fiscal savings on the other side of the ledger. Big numbers on both sides of the balance sheet leave the bottom line nearly indiscernible from the spring update (~$7 bn improvement over 5 years).
• As a share of output, the deficit trajectory contracts marginally faster from an expected 1.8% of GDP this year to 1.3% by FY31 (~0.1 ppt annual improvement). The debt trajectory similarly shows a marked improvement with the level settling at 40.1% of GDP—for a 1.5 ppts improvement—relative to the spring projection.
• While backward looking, last year’s shortfall (FY26) showed a surprise improvement ($39.3 bn versus an earlier-projected $66.9 bn) owing to strong revenue tailwinds.
• A substantial share of new spending was expected—notably the pre-announced $36 bn Productivity Mega Deduction—that reflects about a quarter of the budget package. Investments in Indigenous infrastructure—at $26.6 bn is another component. Earlier-announced tariff relief, investments in connectivity infrastructure, and defence spending are also folded in. In total, a wide range of ‘investment’ related measures reflect almost 60% of the new spending package.
• The budget contains substantial measures for vulnerable households. On top of earlier-announced measures, the budget announces another top up to the Grocery benefit ($4.7 bn in 2027). There is also a substantial $16.5 bn in investments related to non-market housing and supportive infrastructure.
• Canada's continued investment push remains the right course but it compounds near-term inflation risk as the Bank of Canada begins removing accommodation. Continued fiscal expansion from other orders of government adds to that pressure.

Key Takeaways

• Nearly 1 million homes across Canada needed major repairs in 2021, or 6.1% of all homes.
• Indigenous and subsidized housing had major repair rates above the national average.
• Homes needing major repairs were much more likely to have mould, mildew and pests.
• We often think about housing supply in terms of the homes we need to build. But we should also think about the homes we cannot afford to lose.

As of 2021, nearly 1 million homes across the country already required major repairs, putting existing housing supply at risk at a time when Canada needs it most.

This doesn’t mean Canada's housing stock has been neglected. In fact, overall repair rates have remained relatively stable since 2016. But because the housing stock kept growing over the last several decades, the number of housing units requiring major repair has also grown.

Housing maintenance is about more than buildings and investment. It ensures housing supply is readily available and remains habitable. It can also protect people's health. When maintenance is deferred, the impacts are most likely to be felt by people already facing the greatest housing challenges.

Housing conditions aren’t equal across Canada. Indigenous people and those living in subsidized housing are more likely to live in homes requiring major repairs. This can reduce housing supply and contribute to poorer housing conditions that can affect their health.

Continued investment in maintenance and renewal remains important if Canada wants to maintain enough housing to meet people’s needs and that keep it affordable.

Housing supply has struggled to keep pace with demand across Canada. In response, many cities are introducing zoning changes to support small-scale infill, speed up approvals and encourage more housing. This CMHC analysis finds that small-scale infill is becoming a more important source of housing supply. How much it adds will depend on zoning changes and financial viability.

Key Findings

• Small-scale infill is increasing as a share of housing starts: Small-scale infill is now estimated to account for 1 out of every 10 housing starts in Canada in 2025. While most new housing is still built through larger developments, small-scale infill is playing a growing role.
• Zoning changes can produce upward shifts in supply: Vancouver, Edmonton and Toronto have eased zoning rules at scale. Between 2023 and 2025, the share of new housing coming from small-scale infill in these cities rose from 4.7% to 16.1%. While many factors shape housing construction, this increase suggests zoning reforms have contributed.
• Broader market and development conditions still shape infill growth: Broader market and development conditions will still shape the growth of small-scale infill. Fees, approval timelines, building rules and financing all affect whether projects can move forward.