The apartments that never were
PEI may have lost out on hundreds of multi-family homes each year due to regressive permitting practices
If the news wasn’t clear enough, Prince Edward Island is experiencing a housing crisis. Rental options are scarce and pricey, and shelters are hard to come by for those who find themselves unhoused. Islanders, especially renters, are grappling with a steep rent hike and hurricane damage that will make housing more unaffordable and, in some cases, uninhabitable.
This crisis is driven by a number of factors. For example, tenants’ rights on PEI lag behind many of those enjoyed by renters in other provinces. Much of this can be attributed to PEI’s traditionally high rate of homeownership. Although the Island is experiencing the sharpest drop of any province in terms of ownership, the interests of the province’s growing renter base haven’t been reflected in housing policy. The number of renter households increased significantly in the past five years, but rental supply has not kept up with demand. PEI’s primary rental vacancy rate has remained below 2% since 2016, bottoming out at 0.3% in 2018.
Provincial and local land use rules generally favour housing options that are geared towards owning a home rather than renting one. This could explain the relative scarcity of row houses and apartments — especially those in buildings taller than four storeys.
When compared to the owner-heavy housing types like single-detached homes, it is clear that multi-family options are in short supply. The problem can be attributed to the Island’s patchwork approach to land use planning. In cities and towns, official plans zone generous amounts of land within municipal boundaries for single-family homes only. These plans also impose steep minimum parking requirements that discourage infill development. On the other hand, the provincial government does not have an Island-wide land use plan to ensure consistent development practices across both municipalities and unincorporated communities. This means that homebuilders are discouraged from building up in cities, and instead encouraged to build out in sprawling patterns of ribbon development beyond population centres.
To get an idea of the Island’s planning preferences, the building permit datasets available through Statistics Canada provide some guidance. The agency collects residential and non-residential building permit data relating to construction, renovation, conversion, and demolition. Within the residential building category, all those data points can be further disaggregated by geography and dwelling type (single, double, row, apartment, etc.).
PEI’s small population means that data aren’t available for metro areas like Charlottetown or Summerside. However, comparisons can be made between the building permit trends of the Island and those of the country and its biggest cities.
In recent years, Prince Edward Island has lagged when it’s come to permits for multi-family housing options like row homes and apartment units. While apartments generally account for around 60% of Canada’s monthly residential permit activities, the Island’s output is around half that amount on a proportional basis. Compare that to pro-housing jurisdictions like Montreal, and PEI’s output is further reduced to a third.
Seeing these numbers, I found myself asking a question: If PEI had permitted apartments at the same rate as the rest of Canada, how many more apartment units would’ve been in the province by now? To answer this, I took the total number of monthly permits for newly created dwelling units on PEI and then multiplied it by the national share of new residential units being allocated to apartment construction for each month. The results were shocking.
On average, the Island’s various planning authorities issued permits for 517 new apartment units per year between January 2018 and August 2022. If the national rate were applied over that time, the total number of units would’ve jumped to 905. This means that, on average, PEI lost out on around 388 apartment units each year — over 1,800 units in total — since January 2018.
There are some obvious limitations to my math here. First, there is no guarantee that the same number of total dwelling units would’ve been added if permit rules better favoured apartment construction. This means that the denominator on which I made these calculations could be subject to change. But on the flip side, the Statistics Canada datasets don’t list applications that were either rejected or withdrawn due to restrictive permitting practices — meaning that the number of missing apartments each year could’ve been much higher than 388.
Second, this is not a net total — units would likely be demolished or lost through conversion from single- to multi-family homes. However, lost units represent a very small portion of PEI’s permit numbers as it stands currently. Although reforms to permitting would likely steer development towards converting some existing detached dwellings rather than building on greenfield and farmland, the number of units lost would still be minimized.
Third, developers may not be more able or willing to build apartments even if land use rules changed to encourage their construction. One builder I spoke with attributes the low multi-family housing construction on the Island to both zoning and industry capacity. Additionally, obtaining a permit may not immediately translate to construction getting started, let alone getting completed.
Although PEI faces significant labour constraints in the construction sector, planning reforms may reduce the material and legal costs of apartment projects. Additionally, the CMHC recently published a report arguing that multi-family housing “provides less logistical constraints of moving labour materials and equipment among structures than single-detached homes.” Policy change could play a big role in encouraging these more affordable types of housing.
Limitations aside, this retroactive look at PEI’s permitting practices suggests that hundreds of Island families, especially ones that don’t own property, have been starved of access to more abundant and affordable housing options. And while a clear lack of housing on PEI has impacted families over the past few years, it’s never too late to change course.
With local elections around the corner, and a provincial campaign next year, now is the time to make elected officials aware of the role they can play in encouraging permits for multi-family options. We can’t say that housing is a human right if we don’t let homes get built in the first place — legalizing apartments would help fix that.
