Like Sweden, Japan and the United States before it, Canada will begin experimenting with factory-built housing on a larger scale next year, and has many lessons to learn from countries where the industry has already matured.
Build Canada Homes, the federal government’s newly created home building agency, aims to fund the construction of 4,000 modular homes on federal lands across the country starting next year. The public-private project, currently limited to six cities, could eventually be expanded to build 45,000 homes, according to Ottawa’s announcement.
This is just a small portion of the 4.8 million homes that, according to the Canada Mortgage and Housing Corporation, it will be necessary to build by 2030 to restore housing affordability in this country, but the federal government hopes manufactured homes will play a crucial role in easing the housing crisis.
Canada’s modular housing industry is relatively nascent compared to other countries around the world where factory-built homes, touted as fast, cost-effective and more sustainable than traditional construction methods, are eating up more and more market share.
Most homes in Sweden are built with prefabricated elements. Japan’s own prefabricated industry is expected will be worth more than US$23 billion by 2030, according to market research. And densely populated Singapore is at home to huge modular buildings with almost 1,000 apartments.
Yet for every success story, another country has failed to scale up modular housing to meet affordable housing needs, say housing experts and economists who spoke to CBC News. Canada, with its own unique set of housing challenges, has much to learn from the achievements and mistakes of its peers.
Lessons from around the world
“Building culture in Canada, and I would say in North America, is primarily related to on-site construction… and we’re still very much tied to that,” said Carlo Carbone, a professor of environmental design at the University of Quebec in Montreal, who has done extensive research on prefabricated housing.
By contrast, Japan has a long history of modular housing that is partly related to the country’s high earthquake risk, with parts designed to be easily replaced, he said. And Sweden’s prefabricated housing industry has been around since the 1940s, and the sector is now highly standardized and coordinated across supply chains.
Ontario’s housing crisis has been an ongoing problem for years and some experts say modular housing could play a crucial role in addressing the problem. Prefabricated buildings are built in factories and assembled on site. CBC’s Ali Chiasson has more.
When it comes to design and execution, the two countries serve as a sort of north star for manufactured home builders around the world, including Canada.
“We’ve looked at Sweden both for its technology and its automation, its construction techniques, and also other countries like Japan that are quite advanced,” said Lesley Herstein, strategic partnerships manager at Assembly Corps, a Toronto company that designs and builds prefabricated wood buildings.
Assembly recently purchased equipment from Swedish firm Lindbäcks, a world leader in modular construction, and has enlisted the company’s help to build a new factory in Toronto.
Investigating how and why other countries with successful modular housing industries built their sector, Herstein said most had “a lot of demand for affordable housing,” or housing that was needed to support accelerated population growth, such as Sweden’s postwar baby boom.
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“The federal government [is] recognize that there is that level of need and that something must be put in place so that these homes are built to the extent and scale that we are talking about,” he said.
Still, for every success story, there’s another case where a national modular housing strategy failed to get off the ground. The United States developed a program in the late 1960s called Operation Breakthrough, a brainchild of the Department of Housing and Urban Development that ultimately proved a failure.
The program was intended to improve housing affordability for low-income families after the post-war population boom and demonstrate the value of manufactured housing. But he failed to climb. Some of the projects had cost issues and would not have produced housing that was, in fact, affordable.
More recently, startups that promised to revolutionize the real estate industry in the US and UK market have filed for bankruptcy, citing a wide range of reasons, from pandemic-related delays to excessive regulation and a negative association with this particular style of housing.
“In areas where it has failed, I think it’s always linked to this idea of bad design. And we have to avoid another era of connotations of cookie-cutter designs that are just similar and boxy and that no one really wants to live in,” Carbone said.
“This is not some kind of panacea”
Meanwhile, New Zealand’s KiwiBuild program, launched in 2018 to respond to demand from first-home buyers, fell well short of its construction targets and missed many of its deadlines, with only 2,300 units of the 100,000 planned for the end of 2024 having been built. The program ended in October.
“I think KiwiBuild offers a warning that this is not some sort of panacea (modular homes) to solve all of our housing affordability problems,” said Randall Bartlett, deputy chief economist at Desjardins.
Modular home construction can be more efficient and is used in some aspects of home construction right now, Bartlett added.
But in the case of New Zealand, the program “was never able to build housing on a scale close to the ambitious targets it set – in fact, a fraction of the original ambitious targets”. There were issues with the quality of housing and there wasn’t necessarily demand for modular construction, he said.
The units emerging from Build Canada Homes will help low-income families in need of affordable housing.
“You just have to be careful that the government doesn’t [be] too harsh,” said BMO chief economist Douglas Porter, warning that it could discourage new investment in the real estate sector.
In fact, Canada’s modular housing industry will face its own set of unique challenges. The size of the country will make transporting large units over long distances more difficult, and inter-provincial trade barriers (reducing them is a work in progress) will contribute to time and cost.
The site in Montreal’s Côte-Des-Neiges—Notre-Dame-De-Grâce district includes 27 rooms with 24-hour support services. The project aims to provide vulnerable people with a stepping stone to permanent housing.
“Many of the pieces of what Build Canada [Homes] is trying to do already exists in different examples across the country,” said Brian Doucette, associate professor at the University of Waterloo’s School of Planning.
There are manufactured housing projects across Canada, from a recent project in Montreal that aims to provide housing for the homeless population, to a recently completed public housing project for families in rural Nunavut. But some initiatives have also faced rejection at the local level.
“If we can do thousands of these various types of genuinely affordable non-market housing developments or units across the country, then we can have this parallel system of housing that actually responds to residential needs, not just what the market deems most profitable to build,” Doucette said.
