Canada needs to double its housing output—but we won’t get there with stick-built homes, aging crews and analogue systems.
Prefab, a type of modular construction, slashes build times by up to 25 per cent, costs up to 50 per cent less per square foot, and cuts emissions by 70 per cent, according to a 2024 University of Toronto report.
It’s safer, more predictable and proven. Sweden builds 80 per cent of its new homes this way. Singapore wrote it into national policy.
Yet most Canadian developers still treat prefab home construction like a science experiment since the systems around it—including financing, insurance and permitting—weren’t built with it in mind. Until Canada modernizes the rules, we’re doomed to a state of permanent undersupply that lower interest rates can’t fix.
Prefab can only succeed if the support systems that would allow it to deliver its full potential are established. To do that, let’s take some inspiration from an industry that mastered scale decades ago: fast food.
McDonaldizing housing
Just as McDonald’s scaled its operations through standardization, prefab can scale housing without sacrificing design or quality. Off-site doesn’t mean off-brand—it means off-the-charts efficiency.
Today’s modular mid-rises, especially those built with mass timber and AI-optimized layouts, are nearly indistinguishable from site-built homes. They go up faster, perform better and look just as good if not better.
Plus, the stigma around prefab is fading. Canadians increasingly care less about how homes are built and more about whether they’re within reach.
This is the McDonaldization of housing—not in a lowest-common-denominator sense, but in its scalable, systematized form. More than just burgers and fries, McDonald’s serves consistency, efficiency and predictability across its worldwide locations.
The chain itself also embraced prefab construction. In the 1990s, it slashed restaurant build costs by 30 per cent using modular construction, standardized layouts and co-ordinated supply chains. By 2022, 80 per cent of its locations were built off-site, many of them net-zero, without compromising its brand or customer experience.
Prefab housing can follow that same playbook—and already is in some cases. Modular factories are applying assembly-line logic to design, procurement and delivery; using AI to compress timelines and optimize floor plans; and fabricating timber panels off-site with robotic precision.
But the policies around prefab remain far behind the technological leaps.
There’s no national prefab code, zoning remains fragmented, and permitting still treats modular like traditional construction—which slows everything down. The federal government’s $26 billion housing plan includes $25 billion in low-cost loans and $1 billion in equity, but its effects will lag without regulatory clarity.
There are some signs of progress. Toronto streamlined approvals for laneway and garden suites, the city’s Housing Now initiative prioritizes modular on public land, and major real estate entities are increasing their presence in the modular space.
The Canada Mortgage and Housing Corporation’s (CMHC) revival of its postwar catalogue is another encouraging step. But unless it’s paired with clear planning rules and fast-tracked approvals, prefab will remain a patchwork of pilots as opposed to a national solution with a standardized, scalable model.
Be transparent—like Wendy’s
If prefab housing wants scale, it needs trust—and that starts with visibility.
Wendy’s didn’t wait for regulators to demand nutrition labels; it pre-emptively volunteered calories, ingredients and more. That transparency established trust and a brand advantage in a competitive, highly scrutinized industry.
Prefab needs the same playbook. Developers should overshare since lenders, insurers and appraisers don’t have reliable data on prefab costs, risks and performance. A standardized “nutrition label” that lists precision, energy use, carbon cuts and time saved can help those key players make informed decisions.
This is also critical when it comes to the capital stack. Prefab requires money up front, meaning materials are paid for before they hit the site—but Canadian lenders typically won’t fund off-site work.
Costs only get recognized when materials arrive on-site, which creates major cash-flow gaps. That forces developers, especially smaller ones, to bridge the gap with their own capital or abandon modular entirely.
While some banks in Australia offer homebuyers up to 80 per cent progress payments before delivery, Canada has no such standard. The result is that most developers stick to what lenders understand: traditional, slower, more expensive, site-built construction. The disconnect runs deeper than cash flow, as banks and insurers are either unfamiliar with prefab or haven’t updated their practices to account for it.
The data exists—prefab brings fewer weather delays, fewer job site injuries and factory-level quality control—but because it’s not visible, it’s not trusted.
Taking a page from Wendy’s playbook can be particularly effective here, especially as leadership is sorely needed. Put your recipe on the table, and the capital will follow.
Domino’s delivers (in more ways than one)
Prefab’s real power is in the process, rather than the individual parts. That’s where Domino’s and its delivery system come in.
Domino’s didn’t set itself apart with better ingredients. It succeeded by re-engineering delivery from point-of-sale systems to GPS tracking. By 2022, two-thirds of orders came through digital channels. Customers were buying visibility, speed and reliability.
Prefab should do the same. Developers often treat prefab like an ingredient swap, plugging factory-built parts into traditional site-based workflows. But that’s like giving a Domino’s driver a map and hoping for the best.
The real value isn’t in the box—it’s in the system that gets pizza from dough to door. Domino’s digitization went beyond ordering; it integrated ovens, inventory, drivers and feedback loops to ensure one thing: hot food, on time.
That’s the blueprint that prefab should follow. Its future rests in mastering the end-to-end experience.
Of course, prefab isn’t automatically cheaper. Costs match traditional builds until scale and systemization kick in. Real gains come from factory-first design, integrating building information modelling into the fabrication process and just-in-time logistics.
That means fewer change orders, faster lease-up and lower financing risk—but only if the entire process is co-ordinated from end to end.
Yet many pro formas fixate on static inputs like cost per square foot, ignoring dynamic savings. Design alone can be 5 per cent to 10 per cent cheaper, but it’s missed when developers chase line-item cuts instead of systematic efficiency. That’s like optimizing cheese costs while ignoring delivery time.
Some progress is happening. AI tools like those offered by Sightline Building Solutions simulate layouts in minutes and optimize for cost, carbon footprint and code. Timeline compression and front-loaded design decisions are already reducing delays.
In a world where 74 per cent of middle market execs cite geopolitical risk as a supply chain threat, co-ordination is a competitive advantage. AI platforms can predict delays, reroute deliveries and flag defects before they hit the site. The next leap won’t come from better drywall; it will come from better data.
Integrated systems drive performance. Domino’s knew that—now it’s prefab’s turn to deliver.
Limitations and opportunities
Like fast food, prefab isn't perfect. Just as regular fast-food consumption leads to increased health consequences, prefab’s efficiency can invite its own kind of irrationality: burnout of factory workers, blandness or a loss of design diversity if deployed carelessly.
As well, Canada only has a handful of high-volume prefab factories—so some developers are looking to the northern U.S. for capacity. This is a missed opportunity to build not just homes, but domestic economic resilience.
These challenges shouldn’t mean we abandon prefab. Rather, using it judiciously is the key to broader adoption.
The key is recognizing prefab as part of the mix—not the only ingredient. It’s not meant to replace every housing model, but it plays a crucial role in a balanced diet that addresses urgent housing needs.
Construction labour productivity is a critical yet overlooked factor in Canada’s real estate system failures—one that’s poised to worsen, as 33 per cent of the construction workforce is expected to retire in the next decade. Embracing the manufacturing economy through prefab is the fix hiding in plain sight.
