Prime Minister Mark Carney speaks with Oliver David Krieg during a visit to Intelligent City in Delta, B.C
Prime Minister Mark Carney has pledged billions of dollars in financing for makers of prefabricated homes to help end the country’s housing shortage. Experts say the plan is visionary – and laden with risks.
Mr. Carney has promised to provide $25-billion in loans and $1-billion in equity financing for companies that largely build homes in factories rather than on construction sites. The federal government will also place bulk orders of prefabricated housing to help jump-start a nascent industry, according to the Liberals’ election platform.
“We will create an entirely new Canadian housing industry,” the Prime Minister said in his first press conference since the election win.
It’s a big, bold bet that could make it faster, cheaper and more environmentally friendly to build a chunk of the 3.5 million homes that official estimates show Canada needs to add by 2030 to restore housing affordability, industry insiders and academics say.
But factories need sustained demand, a large enough market and streamlined production to operate efficiently and profitably.
That’s what Ottawa, the provinces and cities must weave out of the web of housing bureaucracy and hyperlocal rules that currently tangles up residential construction, for Mr. Carney’s plan to succeed, the experts caution.
Prefabricated construction means building some of the structural elements of a home, such as floor, walls and ceilings − but sometimes entire kitchen or bathroom pods − off site in a factory. The components can then be transported to the construction zone for assembly.
While industrialized homebuilding is best known for mobile homes, emergency housing and, in Canada, cottage properties, it can be customized to make anything from middle-class apartments to mansions.
Perceptions that factory-made housing is necessarily boring and bare-bones are misplaced, said Carolyn Whitzman, a professor at the University of Toronto’s School of Cities and lead author of a recent study on prefabricated housing.
“Modular housing can be utterly delightful.”
Low- and mid-rise multifamily homes also lend themselves well to factory-made housing, said Alex Gray, president of Sightline Building Solutions, a modular-home retailer and builder in Southern Ontario.
But the true potential of modular building lies in speeding up the construction of larger structures that use repetitive design, said Richard Lyall, president of the Residential Construction Council of Ontario (RESCON). Student, senior and affordable housing is where he believes the sector can make its largest contribution to Canada’s homebuilding effort in the near future.
Experts say modular can reduce overall project costs by up to 20 per cent and construction time by 50 per cent while reducing energy consumption compared with traditional building methods.
The practice is common in countries such as Japan and Sweden, where nearly half of multistorey residential buildings incorporate prefabricated components. Countries such as Germany and Britain are also exploring the approach to help with local housing needs.
In Canada, manufactured housing would also help alleviate the construction industry’s long-standing labour shortage, which Mr. Lyall predicts is about to get worse.
Financial challenges and weak homebuyer demand amid tariff and economic uncertainty are already resulting in layoffs. Mr. Lyall worries that those who lose their jobs will move to other sectors, or, in the case of the sector’s outsized population of older workers, opt for retirement.
“Whatever way you look at it, we are going to have to go to off-site construction,” he said.
For now, though, factory-built construction accounts for far less than 5 per cent of residential construction in Canada, according to Prof. Whitzman.
Taking the sector into the mainstream comes with steep challenges, she said.
For one, existing research suggests that modular construction is generally faster but only becomes cheaper at scale, she added.
Mr. Carney has promised that a new federal housing entity called Build Canada Homes will place large orders of factory-made housing to jump-start demand. Prof. Whitzman hopes those projects will serve as proof of concept to entice other levels of government to rely on modular housing for projects under their jurisdiction.
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Whether enough of those orders will materialize is a key question.
“Even with government subsidies, you can’t build a factory and hire people without a certain level of guaranteed demand,” Prof. Whitzman said.
Another hurdle to mass production is the fact that homebuilding regulations currently vary across provinces and even municipalities, which makes it hard to service different cities with standardized factory-made parts.
Finally, once they leave the plant, prefabricated components must be assembled quickly.
Financing or construction-permit delays can result in modules lying outdoors in shrink wrap, said Mr. Gray.
“And then you are now faced with condensation buildup,” he said.
Streamlining the process from manufacturing to assembly is essential, he added.
That’s why Mr. Lyall believes that the government will need to produce set designs for prefabricated housing and then preapprove construction that abides by those blueprints.
But even when building approvals are in place, obstacles to modular construction can come from unexpected places.
Prof. Whitzman recalled the case of an Indigenous housing project at a busy city intersection that incurred $1-million in extra costs because the municipal parks department didn’t allow the modular builder to temporarily store material on a portion of a nearby public garden.
“I’m not pessimistic. I’m just sort of pointing out the possible road bumps,” she said.
Source: The Globe & Mail
