In Toronto, where housing prices are racing ahead of inventory, residents are building homes in their yards and moving their children or their parents into them.

After the last of their three children moved out, Joe and Rosalee Mihevc wanted to downsize from their 3,000-square-foot house on the west side of Toronto. The couple considered leaving the city — too much of a lifestyle change, they decided — or buying a condo in another neighborhood, but they couldn’t possibly afford it amid the city’s housing crunch.

So they’re moving to their backyard.

Last year, the Mihevcs erected a two-bedroom, 1,300-square-foot cottage in the grassy patch behind their house. The cost, which the family covered using a home equity line of credit, was about 500,000 Canadian dollars (or $350,000), roughly half what they would have paid for a condo in the area.

“I did 70 percent of the work myself,” said Mr. Mihevc, 70, who served on Toronto’s City Council for nearly three decades before retiring in 2021 to become an adjunct professor of human geography and urban studies at York University.

Joe and Rosalee Mihevc plan to move into the cottage they built on the lawn behind their Toronto house. The question is which of their grown children will move into the main house.Lorne Bridgman for The New York Times
The Mihevcs in their new garden suite, which they built for around 500,000 Canadian dollars (or $350,000), roughly half what they would have paid for a condo in the area.

The question now is which of their children will get to live in the main house. “My kids are having kids, and there’s no way they can afford a big enough place to live,” he said.

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