Can prefab homes help the housing shortage? Local builders tell us what has to change

Build Canada Homes is a new federal agency, launched this year by Prime Minister Mark Carney, that will build affordable housing at scale. According to the agency’s website, it will leverage public lands, offer flexible financial incentives, attract private capital, facilitate large portfolio projects, and support modern manufacturers.

Paul Kealey, founder and CEO of Ottawa-based EkoBuilt, established in 2004, welcomes the government’s new initiative and hopes his firm can benefit. 

“The heavy emphasis on modular, prefab building fits with our systems and values. We’re hoping there’s an engagement process and a proper procurement process –– that the government is not just transfixed on large housing corporations –– because, ultimately, some of them aren’t focused on the highest energy-efficiency targets or healthy-building targets.”

The exact criteria for builders to work on BCH projects are not known, but the agency will be able to partner with private-market developers. Initially, BCH plans to build non-market housing on federal land before taking a wider focus on Canada’s housing crisis. 

Builders like Kealey underscore the benefit of the prefabricated approach in expediting the construction process.

“Without prefabrication, house projects –– whether they’re single homes or small, multi-family buildings –– typically take 12 months,” said Kealey. “When we prefabricate, we can cut that time in about half.”

While he commends Build Canada Homes for aspiring to a sustainable approach, Kealey said he hopes concepts such as energy-efficiency are truly prioritized as the government considers its homebuilding partners. 

EkoBuilt specializes in “passive house” design, which utilizes a unique building standard for ultra-high energy efficiency. 

“The biggest benefits are the energy savings from a heating and cooling perspective. The passive house uses 80 to 90 per cent less energy compared to houses built to code,” said Kealey. “It’s easy building a home as cheaply as possible from a dollar-value perspective, but it’s very difficult maintaining that low affordability cost into the future if it isn’t focused on conserving energy.”

While passive homes cost about 10 per cent more than a standard build, Kealey said that’s negated through savings in utilities, making passive homes a more affordable choice as energy prices rise. Now in six provinces and more than 35 U.S. states, EkoBuilt’s houses are also “hydro-thermically protected,” meaning they are airtight but vapour-open so mold cannot grow within wall or roof systems.

Prefabrication and risk reduction

In the Bank and Heron area, Ottawa’s Theberge Group has just broken ground on its second and third prefabricated modular projects: two, eight-unit apartment buildings. Jeremy Silburt, the firm’s director of acquisitions, planning and development, said he was drawn to the idea of prefabrication as a way to mitigate risk. 

“Project development is a very risky game. You run into all kinds of problems on-site with weather delays, changing prices for materials, (issues with) availability of trades,” said Silburt, adding that Theberge also has multiple 200- to 375-unit buildings in traditional, on-site construction. “I thought if I could find a way to do it better, that changes the development game. 

“When we build them in a factory with a fixed-price contract, it’s very easy for us to get to a tighter number in terms of what our costs are –– we have a smaller contingency to work with.”

In partnership with Guildcrest Homes, another modular builder, Theberge developed a standardized build that could be “rapidly reproduced across the city,” said Silburt. “We came up with an eight-unit design that could be put on a standard-sized lot in Ottawa. Then we could go and do this across multiple lots.”

Silburt said the company’s first modular apartment building went up near Carling Avenue and Churchill Avenue in March 2025. The modular components were built by Guildcrest in Morewood, Ont., about 45 minutes southeast from Ottawa. 

“We have plans to deploy a couple more throughout the year,” said Silburt. “We’re venturing into volumetric, modular multi-family. We’re exploring the opportunity of doing that on a larger scale.”

Setting the industry up for success

While housing from Theberge is outside the initial mandate of BCH to build not-for-profit housing, Silburt said he sees an opportunity for the federal government to stimulate overall demand for prefabricated, modular homes in all aspects of Canadian housing.

“I think it’s a good way to foster an industry,” said Silburt, adding the prefab sector has always struggled to keep pricing at par with traditional, stick-built construction. “We may see market housing creep in as a combination with affordable housing. Then they’ll open it up to those of us who are traditional, private developers to help them get to their (long-term) goals.”

Jason Burggraaf, executive director of the Greater Ottawa Home Builders’ Association, agrees.

“The question to my mind is, ‘Can the government remove the barriers that have prevented mass marketization of prefabricated homes up to this point?’” said Burggraaf. 

Since the housing market is cyclical, he explained, it makes it harder for prefabricated building manufacturers to gain traction since they can’t rely on steady sales. If the government could offer sustained ordering, it would set the industry up for future success, Burggraaf said.

“If you want to hit those bigger milestones –– if you want to do 5.8 million homes across the country in the next decade –– you’ve got to break that housing cycle of low market activity, high market activity,” he says.

As Canada’s population has grown, the pace of homebuilding hasn’t kept up with demand. Burggraaf said that if Canada wants to double homebuilding output from 220,000 to 400,000 units a year –– as the government is aiming to do –– the approach needs to change.

“We’re not talking about increasing factory-built housing at the expense of regular, build-on-site housing, we’re looking at every avenue where we can get housing supply,” he said. “We’re talking about increasing the size of the pie –– really trying to double it.

“I don’t know that prefab is necessarily the solution that’s going to fix everything, but it’s an avenue of housing supply that we can certainly scale-up to get us closer to where we want to be.” 

Silburt pointed to successful models of prefabricated, modular homebuilding in other countries.

“If you look around the world –– if you go to Sweden, the United States, Singapore –– we are years behind the rest of the world in terms of how you build factory homes cheaply and efficiently, we’re 30 years behind,” said Silburt. “The government’s got to get better at how they procure; whatever we can do to get this industry going and get it on its feet (in Canada) –– it’s a struggling industry.”