Sep 24, 2026
Most Canadians don’t need convincing that the housing market isn’t working for them. A majority are also willing to try something different to fix it: 62% would consider a tiny, modular or prefabricated home instead of a traditional house, according to a new report from Meridian Credit Union. Nearly 8 in 10 (77%) say housing attainability is critical to the country’s future.
Wanting a smaller, cheaper home is one thing. Finding one to buy is another. The same report shows builders are struggling to deliver the alternative housing Canadians say they want, and a big part of the holdup happens before a single wall goes up — at the municipal planning desk, where zoning rules decide what can be built and where.
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Here’s what the new data shows, why municipal zoning is such a persistent bottleneck and what to check before you count on a tiny or modular home being an option where you live.
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What Canadians actually say they want
Meridian’s Housing Attainability Report, based on national surveys of 1,500 Canadians and 250 construction-industry decision-makers, found that homeownership expectations are shifting. Beyond the 62% open to modular, prefabricated or tiny homes, Canadians are also warming to co-ownership arrangements and rent-to-own programs as paths into the market. “Canadians are showing us that homeownership is no longer one-size-fits-all,” said Jay-Ann Gilfoy, President and CEO of Meridian Credit Union, in a statement.
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Why municipal zoning is a bigger obstacle than demand
The gap isn’t really about interest. It’s about what municipalities allow. Research by Canada Mortgage and Housing Corporation (CMHC) published in February 2026 found that stricter local land-use rules increase home prices and reduce new construction, with the effect most severe in high-demand markets where rezoning approval rates are lowest. Municipalities control zoning and land-use planning directly, and unless a local bylaw conflicts with provincial legislation, that decision-making power over what gets built — and whether a modular or tiny home is even a permitted use on a given lot — sits almost entirely at the local level.
Programs like the federal Housing Accelerator Fund are meant to push municipalities toward reform, but the pace and rules still vary widely from one city or town to the next.
Builders are stuck too — financing and labour are just as big a problem
Zoning isn’t the only barrier. Among builders surveyed for the Meridian report, 79% say there’s a mismatch between what the industry is building and what Canadians actually need and 63% report difficulty securing project financing. Skilled-trades shortages affect 78% of builders overall, rising to 94% among larger construction firms, and 6 in 10 builders say rising construction costs have made affordable starter homes financially unviable to build.
“Builders are seeing demand for alternative housing options and new forms of homeownership, but bringing those projects to market isn’t always straightforward,” said Jason Teal, Vice President, Business Banking at Meridian Credit Union, in a statement. Construction costs, financing access and labour all have to line up before a lender’s appetite for alternative housing translates into homes a buyer can actually purchase.
What to research before buying an alternative home
Before you start planning a modular or tiny home purchase, run through these key steps:
- Call your local planning department before you budget for a tiny or modular home — zoning that permits one a few streets over may not apply to your lot
- Ask your lender directly whether it finances modular or prefabricated builds; not every mortgage product treats them the same as a stick-built home
- Watch for local bylaw updates on accessory dwelling units and secondary suites — they’re often the first sign a municipality is opening the door to smaller housing
- If a modular or tiny home isn’t available where you want to live yet, ask about co-ownership or rent-to-own programs as a nearer-term path to ownership
- Build extra time into your plans; approvals for alternative housing are improving but still move slower than for a standard detached home
Canadians’ appetite for smaller, cheaper housing isn’t the problem — the system that has to approve, finance and build it is still catching up. B
efore you count on a tiny or modular home as your path to ownership, do the homework on your local zoning rules first. The type of home you want matters less right now than whether your municipality will actually let you build it.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
