Prime Minister Mark Carney tours a modular home under construction by Caivan Homes in Ottawa on Sept. 14.Justin Tang/The Canadian Press
The new federal agency, Build Canada Homes, is betting that modular homes built in sections in factories will help fix the housing crisis. The idea has great promise, but the plan needs to be more ambitious to have substantial impact.
In October, Build Canada Homes announced it is looking for partners to build 540 modular homes in Toronto’s Downsview neighbourhood. It’s part of a plan to add 4,000 factory-built homes on six federally owned sites, with potential to add more later.
Modular housing can shave months off the time it takes to build houses and apartments, as the sections can be built at the same time as the foundation is being prepared at the housing site. Factory-built modules can also be cheaper, as production is somewhat standardized and it’s easier to control for quality. The modules need to be small enough that they are able to be transported by truck and assembled on site using cranes.
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Factory jobs can attract women and older workers to the labour-challenged construction sector, as the jobs have more predictable hours and require less physical strength. Production doesn’t need to stop for bad weather, and can run around the clock. Given there is less work done on site, neighbours face less noise and traffic disruption.
Modular homes are often criticized as cookie-cutter designs: junky-looking school portables or trailers at remote work sites. But when done right, the technology can be used to make a variety of high-quality single-family homes and apartments.
A transition to modular housing could provide a boost to the overall economy, given that as the construction sector has grown, its productivity has declined. Residential building, in particular, is made up primarily of small firms, which are slow to adopt new technologies.
Moving part of home construction into factories essentially industrializes the process, and research from the University of New Brunswick’s Off-site Construction Research Centre shows how the sector can take greater advantage of mechanization and automation. The fact that the founder of one of the country’s largest homebuilders, Mattamy Homes, is starting a prefabricated housing factory is a sign that the sector has potential to scale.
The federal government is right to work with private partners and non-profits, rather than attempt to build the homes itself. Ideally, the public investment in much needed non-market housing can serve as a catalyst to create a bigger modular industry that can make the construction of regular market-priced homes faster and cheaper.
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Private investors are reluctant to shell out money to build these factories unless they have a steady book of orders that will allow them to keep production going. Build Canada Homes needs to quickly move past one-off demonstration projects if it wants to boost the modular housing sector and meet its overall goal of doubling housing construction over the next decade.
The federal government can make other contributions that don’t come with a hefty price tag. As a report from the University of Toronto’s School of Cities points out, modular construction is being held back by building codes and regulations that vary by province and municipality. Federal leadership – backed by a willingness to withhold funds from jurisdictions that refuse to comply – can spur them to standardize rules and speed up permitting and rezoning to match the speed of modular projects.
Financial institutions and insurance companies also have a role to play. They should address gaps in their current practices, which make it hard for modular companies and individuals buying these homes to get financing and insurance.
There are many potential pitfalls. An Auditor General report on the City of Toronto’s modular housing initiative meant to address homelessness found that insufficient planning and unbudgeted site preparation costs and changes led to significant cost overruns. These types of errors could create skepticism about the sector. Municipalities need to properly manage projects, and make sure their own regulations don’t slow down or block modular developments.
The potential benefits of modular homes makes them worth the risk. The federal government has lofty ambitions about increasing home affordability, but hasn’t come through with a plan that matches the scale of the problem. Canada needs a blueprint with ambition – and modular housing should be a key part of it.