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Government looks at factory-built homes to increase supply

Updated: Jan 26

The Canadian federal government is exploring the use of factory-built homes as a strategic approach to rapidly address the housing shortage in the country. Housing Minister Sean Fraser recently disclosed that the upcoming phase of Canada's housing policy will prioritize increasing the housing supply, with a particular focus on integrating factory-built homes into the industrial strategy for scaling up production.

Fraser described the strategy as ambitious yet achievable through collaborative efforts involving various levels of government and the private sector. The Canada Mortgage and Housing Corp. (CMHC) has projected a shortfall of approximately 3.5 million homes by the end of the decade, exacerbating affordability challenges as average home prices surpass $1 million in some cities. Despite a notable 18% increase in housing starts in December, reaching 249,255 units on a seasonally adjusted annual basis, more substantial measures are deemed necessary.

Factory-built homes, also known as modular homes, are recognized as a potential solution to meet the growing demand for housing. According to Sunil Johal, Vice President of Public Policy at CSA Group, modular construction allows for the fabrication of building components or modules in a controlled off-site factory environment. Johal, in an interview, acknowledged the significant demand for modular homes but highlighted regulatory barriers that impede their widespread adoption.

One of the key obstacles identified is the "limited awareness" among regulators, leading to prolonged project approvals. Johal emphasized that the time-consuming regulatory processes negate one of the major advantages of modular construction – its ability to deliver projects swiftly. To overcome these challenges, Johal suggested a targeted policy approach, including addressing gaps in building codes and streamlining inspections and approvals specifically for modular construction.

The CSA Public Policy Centre recently released a report underscoring modular housing's potential to alleviate Canada's housing shortage. The report recommends government interventions to capitalize on modular housing, such as addressing building code gaps, providing training and guidance for industry stakeholders and regulators, and improving access to financing.

Despite these challenges, some homebuilding companies are poised to embrace modular construction in Canada. The Caivan Group of Companies, operating in over 50 communities in Ontario, leverages technology like AI and generative design to automate significant portions of the factory home-building process. Co-founder and CEO Frank Cairo mentioned the need for clarity in the approval regime for factory-manufactured homes compared to traditional builds.

Modular building approaches, according to Johal, offer substantial reductions in construction times, with completion schedules 25 to 50 percent faster than traditional methods. Approximately 80% of construction occurs offsite, contributing to cost savings of up to 20% and reducing waste by up to 46%. Cairo, from Caivan, highlighted that their technology shaves about three and a half months off the build cycle of a new home, thanks to generative design algorithms that automate architectural processes.

In conclusion, the government's interest in factory-built homes represents a proactive step toward addressing Canada's housing challenges. While regulatory hurdles and awareness gaps persist, collaboration between stakeholders and targeted policy measures can unlock the potential of modular construction, offering a faster, more cost-effective, and environmentally friendly solution to the housing shortage.