Builders ramp up factory-built housing as Canada seeks faster construction solutions
As Canada faces mounting pressure to expand its housing stock, modular homebuilders say they’re ready to step up – if governments help scale production and standardize approvals.
At Ironwood Manufactured Homes in Woodstock, New Brunswick, factory workers are assembling a home a week, accelerating timelines by building indoors rather than on-site. Owner Mark Gaddas says their efficiency will increase further as they prepare to move into a new factory ten times the size of their current space.
The company, founded in 2018, received $2.5 million in repayable loans from federal and provincial governments to help fund the expansion. The new facility will allow Ironwood to produce up to 15 homes at a time and break into multi-residential housing like hotels and dormitories.
“We strictly build custom modular houses right now,” Gaddas told CTV News. “The new facility will give us the capacity to get into multi-residential.”
While modular housing still represents a small portion of the market, it’s getting significant federal attention. Prime minister Mark Carney has called it the future of housing and pledged $25 billion in financing to prefab builders as part of his plan to double Canada’s home construction rate.
As part of the initiative, Build Canada Homes intends to help manufacturers ramp up automation, hire more workers, and maintain steady production during seasonal lulls by placing bulk housing orders.
“It’s not the silver bullet to the housing crisis,” Gaddas said. “It’s part of the solution. It isn’t the ultimate solution.
“What we can offer is speed.”
Provincial governments are also on board. BC Premier David Eby has pledged to “fast track” the sector’s growth, while Modular BC envisions factory-built homes eventually making up 25% of the province’s housing supply. Current excess capacity and public investment are seen as critical levers to reach that goal.
Brandon Searle, director of innovation and operations at the University of New Brunswick’s Off-site Construction Research Centre, echoed that modular housing could be a major part of solving the crisis.
“I’d say they’re a large piece,” Searle said. He added that prefab builds are faster, use fewer workers, and result in less waste. Costs are more predictable, too, as most decisions are finalized pre-construction.
Still, he warned of barriers: high startup costs, inconsistent policies across municipalities, and uncertain demand. “Creating that sustainable demand is a role that the government can play, but also incentivizing them to invest in innovation and automation,” said Searle.
Financing and insurance hurdles are also under study. The centre is examining how Ottawa could potentially underwrite projects to ease those challenges.
Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA), said most of his members still prefer traditional construction due to its predictability and structure. The workforce is largely composed of small crews operating efficiently despite the labour-intensive nature of the work.
“That really has to do a lot with the boom-and-bust nature of the housing industry,” Lee said. “The system kind of operates like a factory but instead of the house moving down the assembly line, the workers move through the house.”
Lee sees value in prefab housing, especially in terms of speed. But he says broader policy changes are required to standardize planning and approvals. “At the municipal level, you cannot build the same house from city, to city, to city,” he noted, due to variations in bylaws and interpretations of building codes.
Ironwood is now looking abroad for inspiration. Its new plant will incorporate automation, including machines for cutting lumber and installing nails or screws with the push of a button. Gaddas points to Sweden as a model, where one manufacturer runs “a zero-labour line” operated entirely by robots.
“The automation that they have is much further ahead than where we are,” he said.
Mathieu Laberge, chief economist and senior VP at Canada Mortgage and Housing Corporation (CMHC), noted that while modular housing remains niche in Canada, it’s the dominant model in Sweden—where 90% of homes are built with off-site components.
Laberge said that shift was no accident. In the 1960s, Sweden identified prefab construction as the way forward and subsidized projects to build a reliable demand base.
“Now, they don’t need any more government support, because it’s a self-standing industry. And that’s the point we’re at in Canada,” Laberge said.
He and Gaddas both highlighted misconceptions about modular housing that it’s cookie-cutter or low-quality.
“That’s not true,” Laberge stressed. “They’re good-looking, they’re high-quality, well-insulated, weather-appropriate for Canada. And so, these are all misconceptions that we need to overturn.”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
