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It’s no secret: Canada is in the midst of a housing crisis. From increasing prices to a shortage of supply, there’s a serious need for solutions that can build new housing quickly and inexpensively. That could mean thinking outside of traditional construction methods.
One promising approach has actually been around for some time: modular and prefabricated (prefab) homes.
What are modular and prefab homes?
Modular and prefabricated homes are houses that are manufactured off-site in a controlled production facility, and then delivered and assembled onsite. In Canada, there are three main types of prefab homes: mass timber, panelized, and modular.
With mass timber, the building components are made from multiple layers of wood that are fastened together. Panelized construction is similar, but assembles individual building panels into a complete structure.
With modular construction, the manufacturer builds a series of independent three-dimensional units in their facility, which are then transported to your property and assembled into a complete home in a matter of a few weeks or even days.
The pros and cons of prefab
Modular and prefab homes offer several distinct advantages over traditional construction. For one thing, because their component pieces can all be constructed at the same time, they can usually be built much more quickly and efficiently than traditional homes.
Prefabricated homes can “reduce build times by 20 to 50%… [and] halve the number of workers needed compared to concrete construction. This is especially valuable during the current labour shortage, because construction timelines can be accelerated by up to 30%.”
Since they’re built indoors, modular and prefab homes can be constructed without having to contend with unexpected delays in any season or weather. They also offer greater precision and quality control, can work with all kinds of sites, and tend to generate less waste and carbon emissions than other forms of construction.
“The main benefits we espouse are increased certainty for the buyer in regard to time, cost, and quality,” explains Ian Garrity, President of Built Prefab, a designer, manufacturer, and installer of premium prefab and modular homes in Kelowna, British Columbia.
One downfall of these types of homes is they are usually less customizable than traditional housing. Some buyers also find them a little too boxy or “cookie-cutter” for their taste (though many innovative companies are working hard to change that perception).
Costs vs. traditional construction
In terms of cost, the price of a modular home can vary depending on the size and style of the home, the purchase price of the land, and especially the location, logistics, and condition of the site where your new home will sit. But because of the reduced construction timelines and labour requirements, prefab homes can be less expensive than traditional homes depending on your location. As with most alternative techniques, the production of prefab housing needs to ramp up considerably before costs come down and all those promised benefits can be fully realized.
“Modular homes can offer fixed costs for the factory-built modules,” Garrity notes. “We have standard designs which can be customized for material selections, material upgrades, and so on. Operating from this baseline, we can be very transparent, especially with costs. If you want what we have, we’re able to execute that at a very high level.”
Choosing a manufacturer
If you’re thinking about going modular, the first big decision is choosing a manufacturer that meets your needs.
Start by doing as much research as you can online or through word of mouth. Get multiple quotes. And try to compare a variety of different options in terms of price, materials and design. Once you have a shortlist, reach out to each of the manufacturers you’re interested in, and ask as many questions as you can about the companies, their products and their process.
For example, how long have they been building modular homes? Which kinds of modular homes do they build, and what materials do they use? How long will the construction take? Can they customize their homes to meet your needs and preferences, or do you have to choose one of their preexisting designs? And do they only build and deliver the components, or will they also be in charge of preparing the site, putting in the foundation and completing, delivering and assembling the whole build from start to finish?
“These days especially, we find that buyers want us to handle everything,” Garrity explains. “All the design, engineering, permitting, site work, manufacturing, shipping, and installation to occupancy. That’s part of our value proposition: we handle everything.”
By working with a REALTOR®, you can save a lot of time and headaches by getting referrals to reputable manufacturers in your area, and making sure you find a builder that delivers exactly (and only) what you need.
Special considerations
Modular homes tend to come with some extra considerations compared to traditional houses. While many financial institutions offer mortgages for prefab houses, the timing, rules, and eligibility requirements can be a little different from traditional homes.
Owning a modular home can also impact your home insurance. It’s also important to note prefab homes must meet all Canadian Standards Association (CSA) regulations and local building codes before they leave the factory.
In addition, the rules surrounding considerations like building permits and whether your modular home qualifies for a new home warranty can vary considerably from one province or municipality to another. So be sure to check with your local authorities, or ask your REALTOR® for advice.
How is the government helping to move things forward?
According to the Canada Mortgage and Housing Corporation (CMHC), to improve affordability, Canada needs to build 3.5 million more homes by the year 2030.
“As has now been well documented in Canada, housing supply responds slowly to increases in demand. So, while immigration can increase rapidly, housing takes many years to adjust to any unanticipated increases in demand,” the report states. Because of this, CMHC has downgraded its projection on how many housing units Canada will have by 2030 from 18.6 million to 18.2. Million.
“An important reason for this decline is the current shortfall in housing construction. Materials have gotten more expensive, labour is in short supply, and it’s hard to get financing for construction,” the report adds.
But even the most optimistic projections predict we’re likely to fall short of that goal by at least 3.5 million homes.
Both CMHC and the federal government have highlighted prefab housing as one way to help make up for any that shortfalls. Earlier this year, the federal government announced a $600 million federal investment to foster the construction of prefab housing across Canada.
“When I talk to builders in different markets in Canada, some are already experiencing a labour shortage that’s preventing them from growing their home building capacity,” Housing Minister Sean Fraser said during episode 52 of the REAL TIME podcast. “We also see an opportunity to overcome this not just by training the next generation of Canadian workers, but by incentivizing new construction methodologies to pull from a different labour pool—specifically modular housing, panelization, mass timber, potentially even 3D printing—that don’t necessarily rely on the same pool of skilled tradespeople that traditional home builders may.”
The federal government is also developing a catalogue of pre-approved house designs that could ramp up the construction process and bring costs down. In addition, many provinces and municipalities have already begun making changes to their zoning bylaws and building codes to help pave the way for more prefab homes.
The Government of Ontario, for example, is developing a modular housing framework to pre-qualify companies that are interested in manufacturing modular housing, and encourage the construction of more prefab homes. The City of Toronto also introduced its own Modular Housing Initiative to build up to 1,000 new modular homes for people who are homeless or at risk of becoming homeless.
In British Columbia, the Provincial government recently passed legislation requiring municipalities throughout the province to change their bylaws to allow for the construction of more secondary and laneway homes, including modular homes. In 2016, the Regional District of Okanagan-Similkameen amended its zoning bylaws to permit the construction of CSA-compliant modular homes in all areas that were already zoned for single detached houses.
Your REALTOR® can help
Of course, many home buyers still have a lot of concerns and questions when it comes to buying a modular or prefab home. That’s where working with a REALTOR® who has experience with these types of homes can make all the difference.
“Buyers can use a REALTOR® to purchase the land, and REALTORS® would definitely add value by understanding modular access and whether or not finished modules can be delivered to the building site,” Garrity says.
In addition to answering any questions you may have, REALTORS® can also draw on their network of professionals to help you narrow your choice of manufacturers. They can walk you through the pros and cons, offer guidance on things like building permits or qualifying for a mortgage, and help you negotiate the best deal for both the land and your choice of build.
Perhaps most importantly, an experienced REALTOR® can also help you choose the best styles, designs and materials for both your family, and your future resale value. They can help you make sure your new house is a home.
