Government initiatives, both federal and provincial, that address the national housing shortage are beginning to intersect. Together, they seek to accelerate housing construction through pre-approved housing designs, modular processes, and more efficient building approval processes.

The 2024 federal budget proposed the launch of a new Homebuilding Technology and Innovation Fund. It is intended to “scale, commercialize and promote the adoption of innovative housing technologies and materials in the Canadian housing sector, including modular and prefabricated housing.”

The fund will provide $50 million through Next Generation Manufacturing Canada, with further leverage through the private sector and other government agencies, toward a proposed target of $200 million.

The budget also includes at least $500 million, made available through CMHC’s Apartment Construction Loan Program, for low-cost financing of new apartments built using prefabricated or innovative housing construction techniques.

The province of Ontario says it plans to “learn more about how modular construction can fit into our province’s housing supply.”

Through outreach conversations with modular housing developers and providers in Ontario, Canada and North America, the project hopes to “gather practical and technical insights on construction costs, timelines, economies of scale, regional variations and supply chains to inform further actions to implement modular housing in Ontario.”

Ontario has also pledged to tackle bureaucracy by working with both municipalities and the federal government, and by continuing to “listen to and recognize the challenges facing our municipal partners.”

However, no financial commitments were included in these announcements.

The National Research Council will soon begin its own consultations on the issue of building permits.

These will “address regulatory barriers, including point entry and single-egress designs, and streamline the inspection process” in an effort to identify ways to reduce duplication between factory inspections of modular home components and on-site inspections of buildings, plus other regulatory barriers to factory-built homes in Canada.

But wait, there’s more.

The federal government will invest $11.6 million in the first phase of a catalog of up to 50 low-rise housing designs to be released this fall, followed by designs for mid-rise and single-family homes. Some of these would be suitable for modularization. Meanwhile, several municipalities around the country have released their own pre-approved housing designs for infill lots and laneway homes.

How can these modular initiatives and a federal housing design catalogue lead to more off-site housing construction in Canada?

Chris Hill runs modular home builder BCollective Homes in Vancouver. He also founded BOSS, an open-source, collaborative design resource for other modular builders. Hill told the Daily Commercial News that he is currently consulting with a number of large-scale developers to help them understand available financing and how they can use it to create off-site construction strategies.

Hill said one of the main benefits of the government’s recent announcements supporting modular home construction is the huge interest it has created.

“Even if the federal government does nothing, the fact that they are talking about it now is starting to give confidence. It is at a fever pitch.”

At the same time, Hill expressed some caution.

Modular processes can certainly provide speed, but Hill believes off-site manufacturing must be about more than just construction in a factory.

“We risk losing a lot of the potential of off-site construction if we try to do it the way we’ve always done it.”

North America is struggling with modular housing. A 2023 McKinsey & Company report says that less than four percent of the current U.S. housing stock is built using modular methods. Meanwhile, more than 80 percent of single-family homes in Sweden and 28 percent in Japan have used modular processes.

At the same time, manufacturing productivity is lagging. Single-family homes in the U.S. that took an average of four months to build in 1971 took just over 10 months to build in 2022.

Hill offered a partial explanation. New homes today are much larger and more complex than they were 50 years ago, particularly in terms of moisture control, insulation, and air barrier systems. Construction delays have also become more bureaucratic, something that recent government announcements are beginning to address. Here, Hill sees modularization actually helping to reduce bureaucracy.

Certified third-party manufacturers with quality assurance/quality control systems could be given ultimate responsibility, he says, rather than inspectors rushing through each individual home at various stages.

“The responsibility would be on the factory to produce what they say they are producing,” Hill explained. “They are producing under certification. The burden is no longer on the municipality. As long as they maintain their certification, the inspection process is a lot cleaner and faster.”

The level of robotics and factory automation applicable in Canada will likely vary by country, depending on regional supply chain purchasing systems and the matching of production capacity to demand in different markets.

However, governments at various levels are laying important foundations for improvements that will hopefully result in overall progress. Hill plans to focus on prefabricated components and keep his company “small and nimble.”

“There’s no silver spoon, no easy, obvious answer,” Hill said. “It’s a very complex problem because of the regionalization and the chaos of what construction is.”