Factory-built housing can play an important role in reducing the cost of housing in Ontario by rapidly introducing more supply, according to a report by the Ontario Real Estate Association (OREA).

In Building More, Building Faster, the Toronto-based industry group comprised of brokers and salespeople says building housing off-site, using factory-based techniques, can result in considerable time savings for construction among other benefits. 

The OREA report states modular home building, where most of the structure is built in sections at a factory, then transported to be assembled and finished on-site, can shave 20 to 50 per cent off the construction time compared to traditional means.

“Factory-built housing is a solution that can bring homes quickly and safely to the market,” Cathy Polan, president of OREA, said in an interview with RENX Homes. “Factory-built housing has been in the industry for years, so it was a good solution to a problem we have.”

To promote more factory-built housing, which remains only a small portion of the market in Ontario and Canada, OREA laid out five recommendations that could help eliminate existing barriers.

Five ways factory-built housing can thrive in Ontario

First, OREA urges a standardized definition of factory-built housing. As of March 2025, this had yet to be established in Ontario, which impedes wider public knowledge of the concept and thus, mass adoption. As municipalities often have different definitions, residents and builders can struggle to get their housing starts approved.

Second, Ontario could collaborate with other provinces, territories and the federal government to develop “cross-country standards for factory-built homes and their transportation”, which would ensure “seamless interprovincial trade” and create a wider market. OREA suggests the Ontario government create a vendor of record list to signify legitimate organizations in the sector, offering the potential for quicker approvals and improved public perception and trust.

Placement on the list could be a mandatory step for builders to sell new factory-built homes in Ontario, for example.

Third, OREA took aim at the municipal red tape. An example of a roadblock is how some municipal bylaws consider factory-built homes to be mobile homes. As mobile homes have different zoning rules from standard homes, layers of approvals end up accumulating.

Those regulations can be streamlined with actions such as amending provincial rules to prevent local zoning discrimination against factory-built homes, and harmonizing municipal bylaws to a provincial standard.

OREA urges the Ontario government to partner with local companies and manufacturers. One example would be three- to five-year public-private partnerships where the province works to make available pre-approved, zoned land for manufacturers, and commits to allowing the construction of 5,000 to 10,000 factory-built homes per year.

This allows manufacturers to scale-up their operations, increasing efficiency and also lowering overall costs per home.

Finally, the Highway Traffic Act could be reformed to exempt the trucks carrying factory-built homes from the “spring thaw” policy that limits large truckload weights on many roadways from March to May. The load limits protect roadbeds from damage in the spring when the ground is often water-logged and less able to bear the heaviest trucks.

“We would like to have to factory-built homes built 12 months of the year,” Polan said. "To do that, we need to be able to have the truckload restrictions removed so that it’s one load, and one and done.”

Where to learn from and what can be done

While the report cites actions OREA believes are still required, the Ontario and Canadian governments have already taken steps to support factory-built housing.

In February, the Ontario government committed to investing $50 million into prefabricated homes and innovative building technologies. The federal government poured billions of dollars into the Rapid Housing Initiative to support the development of modular multi-unit rentals.

Municipalities across Ontario have pushed initiatives, such as Toronto’s Modular Housing Initiative, Peterborough’s Modular Bridge Housing Project, and London using a hybrid manufacturing process for a 61-unit affordable housing project in 2022.

Despite the benefits – accelerated project timelines, stimulating Ontario’s economy, overcoming a construction labour shortage, improved quality and sustainability – building housing in factories has yet to truly catch on in Ontario, especially compared to Quebec, Polan said.

She blames a lack of education, particularly the misconception factory-built housing dramatically differs in design and quality from a traditional home.

Factory-built housing today is virtually indistinguishable from a stick-built home, Polan said. If you put up a traditionally built home next to a modular home, she argues most people cannot tell the difference.

The homebuilding sector must better educate Ontarians about factory-built housing’s benefits, she added, particularly the potential to speed up the delivery of affordable seniors housing. This would free up more existing housing for resale, and allow younger generations quicker access to additional housing options.

Polan also prescribes learning from Quebec, a province that “seems to have a solution in place, and it seems to be working.” The province has produced leaders in the sector such as UTILE.