Ottawa Joins the Construction Crew: Feds Enter the Homebuilding Game

The federal government finally seems to understand the scope of Canada’s housing crisis.

To restore affordability to 2019 levels, the country needs to build at least 430,000 homes in 2025.

Currently, we’re only producing 240,000 to 280,000 new homes per year. That’s a shortfall of 150,000 to 240,000 homes annually.

So how do we make up that gap?

Well, it looks like the federal government is back in the homebuilding business and their ace in the hole? Modular homes on public land.

Modular construction isn’t new, but it’s suddenly gaining momentum with Ottawa putting major resources behind it. Over $25 billion in financing is earmarked for innovative prefabricated home builders in Canada. That includes support for builders using Canadian-made materials like mass timber and softwood lumber. Another $10 billion will go to affordable home builders through low-cost financing.

So in total, that’s $35 billion (about the size of a federal budget) being invested to help close the housing gap.

Quick Maths:

That works out to about $145,833 per unit, assuming 240,000 homes are delivered to restore affordability.

Now, if these homes are built on public land, that removes the land cost. But the total construction cost for a 1,500 sq. ft. modular home still ranges from $180,000 to $480,000, depending on location and finishes.

Even with everything going right, that leaves a $40,000 to $300,000 per-unit gap. Maybe that’s where innovation kicks in with mass production, assembly-line efficiencies, and smarter building methods could help bridge it.

This analysis leads to two key questions:

1. While noble, does the federal government have the expertise to develop housing effectively?

   
   

2. And even more importantly do Canadians (especially young professionals and families) want to live in modular homes?

Because at the end of the day, modular or not, if it’s affordable and livable, who cares? #elbowsup