1.5 Million Homes, 64,800 Starts, and a Plan That’s Not Working: How Prefab Can Bridge Ontario’s Housing Gap

When Ontario set its goal of building 1.5 million homes by 2031, the province was projecting 175,000 housing starts per year. Today, the forecast is just 64,800 for 2026, a gap so wide it raises a fundamental question: can conventional construction methods ever deliver at the scale required?

The latest provincial budget, released in late March 2026, quietly revised housing start projections downward once again. Municipal Affairs and Housing Minister Rob Flack acknowledged the shift, telling reporters, “It was a goal set in 2022 when we had robust housing starts. We don’t today” . Finance Minister Peter Bethlenfalvy went further, calling 1.5 million a “soft target” and saying, “I’m not focused on the target. I’m focused on what we can do today”.

Opposition parties were unsparing. Interim Liberal Leader John Fraser accused the government of lacking a plan. Green Party Leader Mike Schreiner called the HST rebate announced in the budget “a drop in the bucket compared to where we need to be”. NDP housing critic Jessica Bell noted that homelessness is “going from bad to worse” and called for a public builder.

Amid the political finger-pointing, one reality remains constant: traditional on-site construction is not scaling fast enough to meet demand. Labour shortages, supply chain disruptions, rising costs, and fragmented regulatory regimes have combined to create a system that struggles to increase output even as need explodes.

The Productivity Problem

A recent Statistics Canada report quantified the industry’s struggle: labour productivity in residential construction fell 37.3 per cent between 2001 and 2023. In other words, we’re hiring more workers and producing fewer homes per worker. As CMHC Deputy Chief Economist Aled Ab Lorwerth noted, companies are meeting demand “just by hiring more and more workers” rather than improving processes. Ontario accounted for the lion’s share of that productivity decline—24.7 of the 37.3 percentage points. The province’s small builders, firms with fewer than 20 employees, were the primary drivers of inefficiency. Meanwhile, demand continues to outpace supply, pushing prices higher and affordability further out of reach.

How Prefab Changes the Equation

Prefabricated and modular construction directly addresses the productivity challenges that conventional methods cannot overcome.

Speed: Factory-built homes can be completed in days rather than months. The CLT House in New York’s Hudson Valley, a high-end custom residence, was assembled in just 11 days . While not every home requires that level of speed, the principle holds: parallel production—building components in a factory while site work proceeds, compresses timelines dramatically.

Labour efficiency: Moving work indoors reduces on-site labour requirements by up to 40 per cent. Workers in factories are more productive because they’re not waiting for materials, battling weather, or moving between sites. This efficiency matters enormously in a province facing chronic skilled labour shortages.

Cost predictability: Factory production reduces material waste from 20-30 per cent to under 5 per cent. Bulk purchasing locks in prices, insulating projects from the volatility that has plagued conventional construction. For a province trying to “get costs down,” as Minister Flack emphasized, these advantages are critical.

Scalability: Unlike on-site construction, which must reinvent the wheel for every project, prefab factories can produce standardized components at scale while allowing customization within repeatable systems. This is the industrial logic that has transformed manufacturing in every other sector—and it can transform housing.

What Policy Should Support

If Ontario is serious about closing the housing gap, the budget’s HST rebate and development charge discussions are a start, but they’re not enough. A serious prefab strategy would include:

1. Public procurement commitments: As the C.D. Howe Institute has recommended, publishing multi-year procurement roadmaps would give factories confidence to invest in automation and workforce training .

2. Financing reform: Aligning CMHC lending with factory production cycles, rather than traditional on-site draws, would address a major barrier for modular builders.

3. Regulatory harmonization: With over 5,000 local governments in Canada, each with its own rules, manufacturers face enormous compliance costs. Provincial leadership on standardized codes would unlock scale.

4. Workforce development: The Kirkland Lake factory model, which combines housing production with trades training for Indigenous women, offers a blueprint for integrating skills development with housing manufacturing.

The Role of PrefabIQ

Our housing software, PrefabIQ provides the digital infrastructure to make prefab at scale possible. The Project Management module tracks delivery and assembly progress across multiple sites. The Compliance Management feature navigates regional codes. The Product Configurator enables customization without sacrificing efficiency. And the Stakeholder Hub connects developers, manufacturers, and governments in a single collaborative environment. Without this kind of operational visibility, scaling prefab across a province as large and diverse as Ontario would grueling. With it, the industry can start to function as the integrated manufacturing sector it needs to become.

A Realistic Path Forward

The government’s shift away from the 1.5 million target is, in one sense, realistic. The goal was ambitious, and the headwinds; inflation, labour shortages, interest rates—have been severe. But abandoning the target without embracing new methods is not realism; it’s resignation. The homes Ontario needs won’t be built by wishing for lower interest rates or modest tax rebates. They will be built by transforming the way we build. Prefabrication offers a proven path to faster, more efficient, more affordable construction. The question is whether policymakers will embrace it with the same urgency they once brought to the 1.5 million goal, or whether they’ll continue to treat housing as a problem to be managed rather than a challenge to be solved.

The gap between 64,800 starts and 175,000 needed is not just a number. It represents families doubling up in crowded apartments, young professionals leaving the province, and people sleeping in tents while waiting for a spot on a waitlist. Closing that gap requires more than incremental tinkering. It requires a fundamental shift in how Ontario builds.