How Far Will Carney’s $26B Prefab Promise Get Us In A Housing Crisis?

Prime Minister Mark Carney has announced a bold plan to inject $26 billion into prefabricated and modular homes through a new initiative called Build Canada Homes. The package includes $25 billion in debt financing and $1 billion in equity aimed at helping Canadian prefab homebuilders. The government says this approach could cut construction times in half, lower costs by up to 20%, and reduce emissions by around 22% compared to traditional building methods.

Prefab construction works by building sections of homes in factories and assembling them later on-site. Supporters argue that this boosts productivity and helps address Canada's ongoing shortage of skilled workers. The idea is that by moving much of the construction process into factories, homes can be built faster, with less waste, and more control over quality.

But prefab construction isn’t a silver bullet. There are concerns about what happens when housing demand slows down. Building large factories to produce prefab homes requires major upfront investment. If the market dips, those factories can end up costing more than they save. While there are efficiency benefits, savings aren’t always guaranteed across every project or region.

Another challenge is how the loans are set up. Some experts suggest the financing should be more flexible. Instead of strict repayment schedules, they propose linking loan repayments to the actual number of homes produced. This would give builders room to breathe during slower periods and reduce the financial risk for those trying to scale up prefab operations.

Looking abroad, other countries have already moved in this direction. Japan, for example, relies more on prefab homes due to a shrinking skilled labour force. Sweden uses prefab extensively to deal with its cold climate. But Canada is a different case—bigger land area, different weather, and building codes that vary from province to province. This makes it harder to apply a one-size-fits-all prefab model here.

Experts agree that prefab homes can help, but they won’t solve Canada’s housing crisis on their own. The country needs a broader strategy that also includes changes to zoning laws, building codes, tax incentives, and mortgage policies. Carney’s $26 billion promise is a serious move, but unless it’s paired with other bold steps, it won’t be enough to reach the goal of 500,000 new homes a year.