Early in the last century, families on the Canadian Prairies could buy mail-order, prefabricated homes. Pieces of the house were pre-built then brought to a family’s quarter section and assembled on site.
The Toronto-based Aladdin Company, one of several suppliers of prefab homes, boasted that anyone who could swing a hammer could build one of their homes.
Today, 25 to 30 per cent of Canadian home builders use some form of prefabricated construction, says the Canadian Home Builders’ Association. Two per cent are making entirely prefabricated homes, according to the association which represents Canada’s homebuilding industry.
There may soon be a lot more prefab homes if the industry follows the association’s recommendations to fix Canada’s housing affordability crisis. On Feb. 8, it unveiled its sector transition strategy — a comprehensive plan to solve Canada’s housing affordability problem. One of its central pillars is an increase in prefabricated construction.
“If we want to shift the industry in this direction, we need to de-risk the investments that builders have to make. And we need the government to work with us on that,” said Kevin Lee, CEO of the association.
Restoring affordability
Canada’s national housing agency, the Canada Mortgage and Housing Corporation, says housing construction will need to more than double over the next decade to restore affordability.
Hitting that target will be a challenge, says Lee, because Canada is “actually headed in the wrong direction right now.”
As it stands, the industry is on track to build 2.3 million homes over the next decade. The corporation says an additional 3.5 million homes are needed to restore housing affordability to 2004 levels.
And yet, in 2023, 64 per cent of Canadian home builders built fewer houses than the previous year. This year, 36 per cent of builders say they expect to build fewer homes than in 2023, according to the association’s housing market index.
Prefab home construction could be the answer. This type of construction can reduce costs by 20 per cent and shorten construction time by 40 per cent, estimates the Modular Building Institute, an international non-profit trade association. The method “comes with many benefits, including faster building with fewer delays and increased output with less labour. It also produces less waste and lends itself to energy efficiency,” Lee said.
Unfortunately, factory built construction isn’t well suited to the boom and bust nature of the house-building market, Lee says. That’s because the method requires “high capital investment, high overhead, a steady workforce and consistent throughput.”
The method comes with other downsides, such as an increase in transportation costs and a lack of customization options, according to a promotional blogpost from LetsBuild, a construction company.
But the association still believes that, for Canada, prefab homes are the way to go.
“So the question is, how do we de-risk the transition to factory-built so we can increase productivity and increase housing supply?” Lee said.
One suggestion the association has floated is for the federal government to offer grant funding to builders to transition to factory-built systems and funding for manufacturing facilities, says Lee.
Other suggested incentives include federal government financing for factory-built plants and equipment or tax credits for equipment.
The association has likened its sector transition strategy to the federal government’s climate plan in the 2023 budget.
“The [government] came up with their plan for a clean economy. But the market for clean tech isn’t quite there. So you provide some additional support for something that doesn’t have the market drive for it,” he said.
But the manufactured home industry faces many of the same challenges as other homebuilders.
“Governments need to first zone land for manufactured housing. This is usually the biggest hurdle and yet the one that starts it all,” said Heather Faulkner Millar, a sales manager at General Coach Canada, a manufactured homes company.
“We have developers waiting to buy land and start projects, but they are stuck fighting for zoning,” she said.
“If the government will stop analyzing the idea of manufactured housing and start working with the companies that already produce the product, we can generate results almost immediately.”
Leave a comment