Creating Conditions for Success – Now you see it, now you don’t?
We had the honor of presenting at a Toronto Regional Board of Trade event in December. During the event, Minister Rob Flack spoke eloquently about the need to create the conditions for success necessary to “get builders, building.” At the moment, as is well document in our work and elsewhere, the conditions are not in place. The industry cannot build at the speed or at a cost point affordable to the majority of the Ontarians. Builders want to build and they certainly don’t want to have to layoff staff that they’ve worked so very hard to skill-up over the last 5-10 years…
Early in the Spring of 2025, it appeared as though Ottawa was beginning to understand the extent of the issue and launched a new initiative, Build Canada Homes (BCH). This initiative by the federal government, to work with private partners and non-profits rather than attempt to build the homes itself, is a step in the right direction. Ideally, the public investment in much needed non-market housing can serve as a catalyst to create a bigger modular industry that can make the construction of regular market-priced homes faster and cheaper. Within the proposed program, one line in particular jumped off the page:
“$1 billion in equity financing to innovative Canadian prefabricated home builders.”
For many within the home innovation ecosystem, this was a significant signal. Canada seemed to be acknowledging that meeting its multi-million-unit housing deficit would require not just more subsidies and approvals, but a true industrial shift: one built on modularization, off-site manufacturing, automation, mass timber, and next-generation supply chains (this is now affectionately referred to as Modern Methods of Construction or MMC).
Unfortunately, in the months that have followed (culminating in the November budget announcement), that language has quietly disappeared. The most recent BCH frameworks, ministerial remarks, and even the federal budget have removed any reference to a standalone $1 billion equity facility for prefabricated or industrialized homebuilding. Instead, BCH has simply promoted the benefit of MMC and outlined that it will prioritize projects/builders/developers that incorporate MMC in their proposals. Still a step forward, right? Well, sort of. It’s complicated. Promoting and prioritizing the use of MMC is laudable for sure. The problem is, we don’t have a functioning MMC ecosystem for builders and developers to tap into!!! This has the potential to frustrate an industry already facing numerous headwinds.
The conditions, so to speak, do not exist for industry to meet BCH where it wants to go. In fact, many prefab and modular companies that would meet the government’s MMC definitions are struggling. Home sales and starts are down. Required new capital investment is not bankable (when has a bank in this country ever stepped outside of its comfort zone?), and, as we have discussed ad nauseum, private growth equity in the sector is diminimis.
No investment dollars = no infrastructure to support MMC scaling objectives = no productivity and cost improvement. The desired industrialized shift, therefore, is unlikely to occur.
The disappearance of the $1 billion equity financing commitment may simply reflect potential policy refinement. More details may yet be released. We are hopeful. But, without a clear replacement, we risk slowing or undermining BCH’s ambition to catalyze and scale MMC. There are crystal clear capacity and capability gaps that need to be addressed. Capital is required. Growth capital, risk capital. Investing in the innovation that will power lasting productivity improvement is money well spent.