One of Prime Minister Mark Carney’s campaign promises during the federal election campaign was to set up a new government bureaucracy called Build Canada Homes (BCH) which would essentially take over from the Canada Mortgage and Housing Corporation in doling out taxpayer dough to encourage new home construction. Carney said BCH would provide $25 billion in debt financing and $1 billion in equity financing to “innovative Canadian prefabricated home builders.” According to the Liberal Party, prefabricated and modular homebuilding “can reduce construction times by up to 50%, costs by up to 20%, and emissions by up to 22% compared to traditional construction methods.” Additionally, it says BCH “will issue bulk orders of units from manufacturers to create sustained demand,” and “financing will leverage Canadian technologies and resources such as timber and softwood lumber, plus support more apprenticeship opportunities to grow our skilled trades workforce.” Most home construction executives, including Keven Lee, CEO of the Canadian Home Builders’ Association (CHBA), will agree the benefits of modular construction and of prefab housing are very basic and, overall, quicker and less labour-intensive in delivering the new homes needed to increase supply. .Carney also promised the Liberals would double the rate of new home construction in Canada over the next decade to 500,000 homes per year, which is, to say the least, very ambitions. “Certainly, the benefit to factory-built housing, the big one, is that it increases productivity, especially if we're looking to increase housing starts at a time when we already have a labour shortage that challenges increased productivity and the ability to build more homes with the same number of people,” Lee told real estate portal, Storey’s. Lee also spoke at the Unlocking Doors seminar, sponsored by BILD Calgary Region in Calgary last Monday. “The challenge to significantly ramping up more factory-built housing is that we have a very boom-bust housing market in Canada and so what you're talking about when you move to more factory-built homes is very significant investments in facilities and overhead, which is good when times are good and very problematic when times slow down.” The CHBA has a Modular Construction Council and Lee says those builders are facing difficult and challenging times, particularly in Ontario and BC. Lee points out most of the companies don’t have large staffs and large overheads and if their output was increased, the more prone they are to economic turbulence. .“Modular and factory-built doesn't tend to be cheaper. It's faster, that's its real benefit, and it takes less people to build more houses. But there are different barriers,” says Lee. “So, will an injection of loans help more investment be good? Yes, it can be, but how you structure those loans will be very important too.” “In other words, you can have all the best intentions of paying back over 10 years, but if the market slows down, you need the flexibility to pay over a longer period." The CHBA released its Sector Transition Strategy in February 2024, which includes recommendations on modular and panelized housing construction, including one that says builders should pay back their loans based on output rather than a prescribed period of time. Meanwhile, Lee says comparing Canada to other countries, such as Sweden and Japan, that have more prefab housing in a big way is a moot point. “In the case of Japan, they have a shrinking population and are at crisis levels in terms of numbers of workers. They've lost over half of their carpenters over the past decade, so that, in and of itself, necessitates going to a manufacturing approach,” he says. .“And Sweden has much more challenging climatic conditions in terms of building all year round, and so it sort of drives construction indoors to make it happen. And they also have a much, much smaller population and geographical region. Canada is much more spread out and If you point to the United States and Australia, which are much more similar to Canada, they have very, very little factory-built, modular building going on.” What Japan and Sweden do have in common with Canada, at the moment, is government intervention. And while it’s far too expensive to build any type of housing in the country, prefab poses “part of the solution,” though not “the solution” to the housing crisis, says Lee. “To really fix a complex problem you need to come at it from every different direction. And whether it's financing, whether it's mortgage rules, whether it's building code, whether it's regulations, whether it's reducing taxes, whether it's factory-built housing, none of those things, in and of themselves, will help us double housing starts. But if we go at all of them, then yeah, we have a chance to really close that housing gap.”
