In its throne speech on Tuesday, May 27, 2025, the new federal government confirmed a policy promise from the Liberal Party election campaign: the creation of a major initiative to expand the capacity of Canada’s prefabricated housing sector. Backed by $25 billion, the “Build Canada Homes” program intends to fund innovation and capacity building in this sector.  

The prefabrication of key building components for assembly at the construction site has the potential to significantly reduce the cost, time requirement, and construction waste of new housing, as well as increase sustainability. 

Read on for a breakdown of this rapidly rising sector. 

What is Prefabricated Housing? 

Not all prefabricated housing or offsite construction options are the same. That makes it important to distinguish between the different types of products and approaches. Here are the two most common: 

• “Panelization” is the most basic form, where individual wall, floor, and ceiling panels can be built in a factory and flat-shipped to a site, where they are craned in place and secured. Many builders in BC already use this process.  

• “Modular” or “volumetric” construction is the production of modules, which can be anything from individual rooms to entire housing units. These are created in a factory, shipped to the site, and assembled “LEGO-block style.”  

In a typical year, BC’s prefabricated housing factories produce about five per cent of the province’s homes. But these facilities are currently operating at a fraction of their capacity, meaning they can produce far more than they do now.

According to Modular BC – an organization dedicated to expanding the overall factory-built home sector in the province – the sector eventually hopes to produce 25 per cent of BC’s housing. That figure seems achievable given the current excess capacity, and the plans of the federal and provincial governments to support expansion.  

Government Interest 

Build Canada Homes plans to invest in prefabricated home producers to help them automate more of their production lines and hire workers for additional shifts. The program also intends to place bulk orders with manufacturers to enable more consistent production runs and keep staff employed during traditional downtimes.  

The provincial government has signalled its support as well. During the fall 2024 election campaign, Premier David Eby announced his intention to “fast track” the growth of the sector to build homes quickly and affordably while creating jobs.  

Other Benefits 

By building in an environmentally controlled facility, manufacturers can maintain high quality while avoiding the exposure to rain and snow moisture that can plague a traditional construction site. The use of quality-control checks at every step of the production process ensures each home meets building code and energy efficiency standards. Indeed, many units being produced today already meet Energy Step Code 4 levels.  

New standardized plans for four- and six-plexes, when combined with the Bill 44 Small Scale Multi-Unit Housing zoning policy, will create the opportunity to quickly and economically bring this type of ground-oriented housing to cities and towns around the province.  

Offsite Construction Challenges 

Not to say that the rapid uptake of prefabricated homes is without its challenges.  

Local governments must embrace plan approval and inspection processes of these homes to ensure that they can be built and installed in a timely manner. To that end, Modular BC has created checklists for building officials at the planning and inspection stages.  

Two other concerns are financing and capacity for housing module transportation. For the former, the sector has engaged the Canadian Mortgage and Housing Corporation to assist with updating high-ratio financing procedures. For the latter, the Ministry of Transportation and local governments will need to streamline approvals for very large loads. 

Finally, and perhaps most importantly, the homebuying (and renting) public will need to shift their perception of prefabricated housing.  

Structures built using offsite construction methods aren’t just for mining camps, trailers, and temporary shelters anymore (though they still hold tremendous value in these sectors). They are high-quality, energy-efficient, cost-effective, and customizable – making them a perfect fit for many buyers and renters in BC.  

There will always be a market for on-site stick-frame construction for custom housing, challenging sites, and high-end clients, but for a significant portion of the market, prefabricated homes will be a big part of BC’s housing supply solution. 

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