Canadians young and old are facing a housing crisis. The good news is that beginning to solve it presents a massive opportunity for jobs, for the Canadian economy, and for building smarter, better homes that save money and boost livability. The solution is an industry that has been ignored for too long, and is finally getting some recognition: modular housing.

Imagine a Canada where rents and mortgages are at reasonable levels because there are enough homes to meet demand. Imagine buying into a new building with a pre-sale where the units are actually big enough to house a family—and the building goes up in two months instead of two years. Imagine up to a hundred thousand new jobs created by a modular homes construction industry that manufactures energy-efficient, quality homes faster and cheaper than we can today. 

This is being done in many other countries. The federal government should take their example seriously and act on it at the scale Canada’s housing crisis actually demands: not 26,000 homes over five years as the current Build Canada Homes plan suggests, not $1B for 2,200 unsold condos in Vancouver, as Prime Minister Mark Carney announced in June, but a national network of modular factories—built by the private sector, financed by private banks, operated by Canadian manufacturers—producing 150,000 energy-efficient homes per year by 2050.

A national program to industrialize Canada’s housing industry would:

• Address the housing crisis with 2 million new homes for Canadian families

• Create tens of thousands of jobs for skilled workers

• Boost domestic energy efficiency and the Canadian workers that support it

• Produce 150,000 quality, well-designed homes per year

• Make Canada a world leader in modular housing technology

One measure of housing affordability is the Mortgage Payment as a Percentage of Income (MPPI) index. Today the MPPI stands [pdf] at 52 percent nationally, meaning that purchasing the average home would require 52% of the average income.

In Toronto, the MPPI is a startling 71 percent: a household earning the city’s median income would need to spend 71 cents of every dollar on the mortgage payment alone to afford a house at the median price of over $1 million. That’s not just a hurdle—that’s a wall, pushing ownership out of reach for too many people across Canada.

The housing crisis goes well beyond aspiring homeowners. For Canada’s most financially vulnerable households, the shortage of social and affordable rental housing is acute and getting worse. Nearly a quarter of a million Canadian families were on a waitlist for subsidized housing in 2022, according to StatsCan Plus, with almost two-thirds of them having waited two years or longer.

The supply gap is getting wider. The Canada Mortgage and Housing Corporation (CMHC) estimates that Canada needs roughly 430,000 new homes every year through 2035 just to restore affordability to 2019 levels—and 2019 wasn’t exactly affordable.

In 2025, Canada started 259,000 homes, and CMHC projects home starts will fall further to 216,000 by 2028. Construction is sagging just as it needs to be ramping up. The situation is the result of the combined drag of higher interest rates and inflation, as well as supply-chain uncertainty driven by tariffs.

The crisis is about housing type as much as quantity. The private market, following the logic of maximum return per square foot, has driven Canada toward an inventory of small, investor-optimized units: 600-square-foot or smaller shoeboxes suitable for a young couple or as rental income for investors, but lousy for families. These are homes that produce housing statistics without producing places that people can actually live in. And they are still, for the most part, far too expensive.

Canada doesn’t just need more homes—it needs affordable, smart homes. Homes that are the right size, built with energy-efficient materials that keep energy costs down and take advantage of the latest technical advances in homebuilding.

Imagine buying a brand new car and finding out it has no Bluetooth, backup camera, USB port, or GPS map capability, and burns 20 litres per 100 kilometres. That is what Canada is doing with its housing stock. Because building codes are not mandating efficient technologies that can slash costs for heat, hot water, electricity and temperature control, new homes often cost their owners tens of thousands of dollars in excess energy bills that a smarter home would dramatically cut. Add rooftop solar and you can cut your bill further still, power your vehicle for free, or even sell energy back to the grid.

Over a 25-year mortgage, those savings more than pay back the cost of building better. Savings compound into tens of thousands of dollars that stay in the pockets of Canadian families instead of going to a utility company.

The National Energy Code for Buildings already provides a pathway to smart, net-zero homes, and the technology to build innovative homes already exists. Canadian companies are already installing, and in some cases, manufacturing it. The problem is not capability. It’s scale, standardization, and political will to grow market adoption dramatically.

Site-built construction is what we’re all used to: crews in vests and hardhats working on a home or building from the dirt up—foundation to frame to roof, and everything in between. Building on site is a long and honourable tradition worldwide, which at its best incorporates true craftsmanship and thoughtful design, and it will always be a part of the construction landscape in Canada and globally. But on its own site-built projects are too slow, too weather-dependent, too labour-intensive, and too fragmented to bridge today’s massive housing gap.

What Canada needs is a revolution in how housing is delivered—the same type of transformation that turned car-making from a craft into an industry. Factory-built modular housing is that transformation, as many observers across Canada, from real estate analysts to media outlets, are starting to point out.

The Carney government’s new Build Canada Homes initiative should be a first step towards it, but it can do far more to accelerate innovation.

Modular housing builds single-family homes and multi-unit residential buildings in sections—modules—inside a climate-controlled factory, using the same materials and meeting the same building codes as any site-built structure.

The modules arrive at the building site complete: walls, floors, ceilings, wiring, plumbing, insulation, and often interior finishes already done. On-site work is reduced to foundation preparation and assembly, which typically takes weeks, rather than the months required by conventional building.

Building in a centralized factory environment rather than on a construction site reduces material waste, allows precise quality control, and enables the kind of standardized production that drives costs down through repetition and scale. Modular construction can reduce build times by 30–50 percent compared to conventional site-built methods.

The Carney government’s newly minted Build Canada Homes initiative has proposed a focus on modular construction, noting that offsite construction reduces construction costs by up to 20 percent at scale, and cuts emissions during construction by approximately 20 percent. But their plan does not go nearly far enough.

Building better costs less in a factory than it does in the field. The factory setting also makes it easier to build to high energy-efficiency standards. Insulation, vapour barriers, triple-glazed windows, and heat pump systems are installed in dry, controlled conditions by workers with consistent training.

What this means for Canadians is not just lowered emissions, but collective savings of tens of billions of dollars.

In September 2025, Prime Minister Carney launched Build Canada Homes (BCH), a new federal agency with $13 billion to spend on something Canada has never before attempted at this scale: financing, building, and industrializing affordable housing: “Build Canada Homes will place an intense focus on using cost-efficient and modern methods of construction such as factory-built, modular, and mass timber,” the announcement promised.

BCH operates on three streams: directly developing homes on federal land, financing projects by non-profits and private developers, and driving adoption of modern construction methods across the sector.

The Parliamentary Budget Office estimates a likely output of 26,000 homes over five years across all BCH streams combined. Twenty-six thousand homes is a drop in the bucket of course, and on its own, BCH doesn’t come close to solving the affordability crisis. But it could be a promising, even game-changing step towards a solution, if the federal government makes the right moves.

The right moves are not complicated, and they build directly on what BCH has already put in place. The agency’s mandate is not just to build homes. It is explicitly to industrialize the way Canadian home construction happens. Its own framework documents describe using federal buying power to “drive demand and establish a consistent pipeline for modern building technologies.”

This is the language of industrial policy, not just housing policy. Expert observers in the modular home industry are already paying attention to it. The federal government should take that language seriously and act on it at scale, going beyond delivering 26,000 homes to catalyzing a new built-in-Canada industry of modular factories producing 150,000 energy-efficient homes per year.

Canadahas gone big with modular before. During the Second World War, C.D. Howe created Wartime Housing Limited (WHL), a federal Crown corporation that built approximately 26,000 homes for defence workers using standardized, semi-prefabricated panels, some going up in as little as 36 hours. The program worked because the federal government was simultaneously the buyer, the standard-setter, and the land provider. When the war ended, WHL was absorbed into what became CMHC.

This is not a utopian proposal. It is a well-documented industrial trajectory that other countries have already travelled.

In the mid-1960s, Sweden faced its own housing crisis. To meet the gap, Sweden industrialized homebuilding via the Million Homes Programme, a commitment to build one million homes in 10 years—a hugely ambitious move in a country of 7.5 million people.

Between 1965 and 1974, Sweden met that target, building at a pace that transformed the country’s housing stock and industrialized its construction sector in the process. The prefabrication methods developed and normalized during the Million Programme are the direct ancestors of the country’s current modular home-building industry, where roughly 85% of Swedish single-family homes are built in factories, and 90% of Swedish homes have modular elements.

Following a postwar housing crisis, the Japanese government also turned to the industrialization of home construction via modular home manufacturing. The government created the institutional conditions that allowed private manufacturers to scale with confidence, including explicit industrialization targets and, in 1963, a dedicated industry association set up by the Ministry of Trade and Industry and the Ministry of Construction.

The result was a modular industry that has produced an average of 150,000 homes per year since 1995, with individual companies like Sekisui House producing over 50,000 homes annually. Japan did not build those homes purely through government subsidies. It built the industry conditions that made private manufacturers want to build them.

Canada has roughly 40 modular manufacturers today, many producing fewer than 100 units a year, according to the Real Estate Institute of Canada. By contrast, a single well-capitalized factory on the Swedish or Japanese model can produce 1,000 to 2,000 units annually, writes Architizer.

Getting to 150,000 modular units a year, enough to make a serious dent in the shortfall, would require 100 to 200 such factories operating at the scale seen in Sweden and Japan, write researchers at the Terner Center for Housing Innovation at U.C. Berkeley.

Our goal should be a 2050 national target of 150 modular housing factories distributed across the country, producing an average of 1,000 homes each per year. This network—where private bank loans to private-sector builders would be leveraged by government loan or purchase guarantees—could be kicking out 150,000 factory-built, quality homes per year when mature. This is roughly a third of Canada’s needed annual production, and enough, combined with other market outputs, to meaningfully close the housing gap.

Build Canada Homes (BCH) could be an inspiring start that hands this file off, or it could evolve into the agency that manages the effort. The federal government, in moving forward with BCH, has accepted the underlying logic. What it currently lacks is ambition that matches the actual crisis—and real targets for how the housing crisis can be tackled to the benefit of all Canadians.

Those concrete goals are right in front of us. Let’s put the flight plan in place for a nation-building approach to modular housing—and hit the throttle.