A friend of mine used to say, “Every system is perfectly designed to get the results it gets.” He was quoting W. Edwards Deming, a quality control expert and systems thinker. The idea is simple: what we see as problems are actually the natural outcomes of how a system is built.
I think about that quote a lot when I think about housing.
We’re not in a housing crisis because something broke. We’re in a housing crisis because the system is working exactly as it was set up to. That’s not to say someone planned for housing to become this unaffordable—but if you step back, it’s easy to see how we got here.
Take the “missing middle.” If you follow housing conversations, you’ve likely heard the term. It refers to homes that fall between single-family houses and high-rise towers—duplexes, townhomes, and low-rise walk-ups. Gentle density. It’s the kind of housing that works for families, fits into neighbourhoods, and adds supply without drastically changing the character of a street. But we’re not building much of it.
Instead, most of the new housing—especially with any kind of density—is made up of one- or two-bedroom units. And for some folks, that works. I grew up sharing a room with my brother, so I know you can make do. But try fitting a family of five into a two-bedroom apartment. It’s just not practical.
And even if you could stretch into something bigger, where would you find it? Fifteen or twenty years ago, there was such a thing as a “starter home.” These days, with average prices well over $600,000, that feels more like a historical concept than a real option. Families not only can’t afford to buy larger homes—they often can’t find them being built at all.
So if we go back to Deming’s quote, we have to ask: what is our system actually designed to do?
Part of the answer is zoning. For decades, many neighbourhoods were zoned exclusively for single-family homes. Even now, attempts to introduce gentle density are often met with pushback. I’ve seen it firsthand.
Then there’s who we expect to build housing. In Canada, that’s mostly the private sector. And private developers are going to build what brings the best return. Three one-bedroom condos will almost always be more profitable than two family-sized ones. That’s not greed—it’s math.
And government funding often follows the same logic. Most housing money is handed out per unit. More doors, more dollars. So, whether you’re a developer or a non-profit, the incentive is to build more, smaller units—not necessarily what folks actually need.
In other words, the system isn’t broken—it’s doing exactly what it was built to do.
But it’s not what we need. We need a full mix of housing types—single-family homes, mid-rise walk-ups, and everything in between. We need zoning that reflects how folks live today. And we need funding models that prioritize suitability, not just scale.
If we want better outcomes, we need a better system—one designed not just to build units, but to build homes.
Philip Mills, CEO Habitat Waterloo Region
