Homelessness in Canada was not a social problem until the 1980s. The Canadian government housing policies and programs in place throughout the 1970s were based on a concept of shelter as a basic need or requirement for survival and of the obligation of government and society to provide adequate housing for everyone. Public policies shifted away from rehousing in the 1980s in wealthy Western countries like Canada, which led to a de-housing of households that had previously been housed. By 1987, when the United Nations established the International Year of Shelter for the Homeless (IYSH), homelessness had become a serious social problem in Canada. The report of the major 1987 IYSH conference held in Ottawa said that housing was not a high priority for government, and this was a significant contributor to the homelessness problem. While there was a demand for adequate and affordable housing for low income Canadian families, government funding was not available. In the 1980s a "wider segment of the population" began to experience homelessness for the first time – evident through their use of emergency shelters and soup kitchens. Shelters began to experience overcrowding, and demand for services for the homeless was constantly increasing. A series of cuts were made to national housing programs by the federal government through the mid-1980s and in the 1990s. While Canada's economy was robust, the cuts continued and in some cases accelerated in the 1990s, including cuts to the 1973 national affordable housing program. The government solution for homelessness was to create more homeless shelters and to increase emergency services. In the larger metropolitan areas like Toronto the use of homeless shelters increased by 75% from 1988 to 1998. Urban centres such as Montreal, Laval, Vancouver, Edmonton, and Calgary all experienced increasing homelessness.

Housing First is a policy that offers unconditional, permanent housing as quickly as possible to homeless people, and other supportive services afterward. It was first discussed in the 1990s, and in the following decades became government policy in certain locations within the Western world. There is a substantial base of evidence showing that Housing First is both an effective solution to homelessness and a form of cost savings, as it also reduces the use of public services like hospitals, jails, and emergency shelters. Cities like Helsinki and Vienna in Europe have seen dramatic reductions in homelessness due to the adaptation of Housing First policies, as have the North American cities Columbus, Ohio, Salt Lake City, Utah, and Medicine Hat, Alberta.