The Missing Middle Explained: What Canadian Real Estate Investors Need to Know
- Wayne Hillier
- May 16
- 4 min read
By Wayne Hillier, Real Estate Investing Masters
May 16, 2025 | Edmonton, AB
If you've been hearing the term "Missing Middle" lately and wondering what it actually means — you're not alone.
The Missing Middle is quickly becoming one of the most talked-about ideas in Canadian housing policy, but few people truly understand where it came from, what it's trying to fix, and why it matters — especially for real estate investors.
What Is the Missing Middle?
The term "Missing Middle Housing" refers to multi-unit, low-rise housing types that fall between single-family homes and high-rise condos. Think duplexes, triplexes, fourplexes, townhomes, laneway homes, and small walk-ups. These housing types used to be common in Canadian cities before strict single-family zoning took over.
In many urban areas today, you're left with two extremes:
Detached single-family homes
High-rise apartment buildings
What’s missing? Everything in the middle.
Where Did It Start?
The term was coined in 2010 by American architect Dan Parolek of Opticos Design. He used it to describe how traditional North American neighborhoods had been stripped of their natural variety of housing types over time — leaving cities with a housing supply that no longer fits modern needs.
The idea caught on because it addressed a silent but serious issue:
Most cities had made it illegal or extremely difficult to build anything but single-family homes in residential neighborhoods. This locked out younger families, renters, downsizers, and middle-income earners who wanted something more affordable — but not a 20-storey tower.
How Cities Are Responding in Canada
Over the past few years, Canadian cities have begun embracing Missing Middle reforms to modernize outdated zoning laws and unlock new infill opportunities.
Edmonton now allows up to four units on nearly any residential lot and continues to lead the country in zoning innovation.
Toronto passed city-wide multiplex zoning in 2023, legalizing duplexes and triplexes across single-family neighborhoods.
Vancouver, Victoria, Ottawa, and Halifax are following suit, exploring new zoning rules to encourage more mid-density housing types.
Each city’s version of the Missing Middle is unique, but the overall goal is the same: more housing options, more flexibility, and more homes in existing neighborhoods.
What Does This Mean for Canadian Real Estate Investors?
For investors, the Missing Middle represents both opportunity and responsibility. Here's what you need to know:
1. Zoning Is Opening Up
In cities like Edmonton and Toronto, zoning changes now allow investors to build or convert properties into duplexes, triplexes, or even fourplexes on lots that were once restricted to one unit. This opens the door to value-add infill projects, garden suites, and multifamily redevelopment strategies that didn’t exist a few years ago.
2. More Units = More Income Potential
Where permitted, a single-family home on a large lot can now be turned into multiple rental units, dramatically increasing gross income and long-term ROI. This also enables investors to stack strategies like BRRRR, JV partnerships, and vendor financing on small-scale multifamily projects.
3. Demand for Family-Friendly Rentals
The Missing Middle naturally aligns with what many renters want: homes in established neighborhoods with access to schools, parks, and transit. Duplexes and fourplexes often attract long-term tenants who are priced out of ownership but still want space and stability.
4. Infill Construction May Become Competitive
As cities liberalize zoning, more builders, developers, and investors are eyeing mature neighborhoods for infill. This may increase lot prices, raise renovation costs, and put pressure on smaller-scale investors to act quickly — or specialize in areas where they can offer unique value.
5. Financing, Insurance, and Management Still Matter
While zoning may allow more units, financing these projects still depends on investor experience, lender policies, and appraised value. Investors must also navigate evolving insurance rules, permitting processes, and the operational complexity of managing more tenants on one property.
Final Thoughts
The Missing Middle movement is reshaping the real estate landscape in cities across Canada. For investors, it presents a growing set of tools — and challenges — to adapt to.
Understanding what the Missing Middle is (and isn’t) is the first step. The second is learning how to use these changes strategically, ethically, and sustainably as part of your long-term investing plan.
Listen to Today’s Episode:
Real Estate Investing Morning Show – Hosted by Wayne & Gabby Hillier
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