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In Atherton, a wealthy suburb south of San Francisco, there are loud voices opposed to new housing. Locals in the NIMBY chorus include basketball player Steph Curry and venture capitalist Marc Andreessen, whose letter to city council deployed a spray of all-caps to make clear he was “immensely against” multiunit housing.

Such a forceful battle against housing density is the latest tale of what’s gone wrong in the Bay Area. It is among the most productive economic regions on the planet – and a place with some of the heaviest restrictions on building new homes, which together have made it brutally expensive to live there. So people are leaving. In 2022, the Bay Area’s population fell for the third straight year.

People of all incomes should be able to flock to cities where the economy is thriving. It buoys individuals, the city and the country. The Bay Area may seem like an extreme example, distant when viewed from Canada, but Toronto and Vancouver are hurtling to the same outcome. Major interventions are necessary and all levels of government need to take stronger actions. That means everything from an overhaul of zoning rules that prevent the construction of ample new housing to using the fiscal heft of government to make sure enough affordable homes – especially purpose-built rentals – are part of the mix.

Picture a young person who has finished university or someone midway through their career. There are job opportunities in Vancouver and Toronto, where sectors such as tech and many others are growing.

Then consider moving there. The latest data show how high that financial hurdle has become – and how Canadians are moving away from those cities. Everyone knows buying a home in Toronto and Vancouver is wildly expensive. The cost to rent is now also in the stratosphere. In late January, Canada Mortgage and Housing Corp. said there is a “severe shortage of rental buildings.” A two-bedroom in Vancouver is almost $3,600 a month and more than $3,200 in Toronto, according to the latest numbers. Both are up almost 20 per cent from a year ago.

And so, as in the Bay Area, people are leaving. Statistics Canada in January reported rising urban populations but Toronto, excluding immigration, lost a net 183,100 people to elsewhere in Ontario or the country over the past two years. The number of children under 10 fell by 2.7 per cent – which indicates families are being driven away. Vancouver still manages to draw people from other provinces but since the mid-2010s, the region lost an average of 13,000 people a year to elsewhere in British Columbia.

In the past, Canada built much more housing. It was about double the recent rate in the 1970s, adjusted for population. Back then, government support was key. “These are things we used to do,” B.C. Premier David Eby told The Globe’s editorial board last week. There was concern this month when Statscan reported that investors – mostly domestic individuals – owned about half of recently built condos. But with far too few purpose-built rentals, condos have filled the gap – drawing investors. It’s a bad solution, since renting a condo is precarious. Tenants can be easily evicted. In one snapshot of the dearth of rental homes, Metro Vancouver has about the same number of purpose-built rentals today as 30 years ago, while the number of renter households jumped 50 per cent.

Mr. Eby is preparing housing legislation to use public money to buy more land around transit stations to build “attainable middle-income housing.” That sort of investment will be crucial. But housing density is equally important. Vancouver’s latest plan is far too timid. This is not the time for incremental change. The City of Toronto could set a template for others as it prepares “more permissive” citywide zoning to be released in March. It has to be ambitious.

The Toronto Region Board of Trade says “attracting talent [and] driving innovation” requires looser zoning laws. The cost of inaction is high: A 2019 study in the American Economic Journal blamed “stringent restrictions” on housing in cities like San Francisco and New York for lowering potential U.S. economic growth by roughly a third over about half a century.

It used to be that cities wanted to emulate San Francisco and the wonders of Silicon Valley. The Bay Area has instead became a warning. Toronto and Vancouver need to heed that warning, and ramp up housing construction. Their futures, and Canada’s continued economic success, depend on it.