Dream Big, Live Small: Moving Away from Traditional Housing

The Current Housing Crisis & Our State of Living

For many, owning a home is a dream; it is considered to be a pillar of “success.” However, this goal has become far out of reach for many individuals around the world. For instance, while salaries in Canada have remained relatively unchanged, housing prices have skyrocketed in recent years. According to Statistics Canada, residential property prices—from condominium apartments to houses—have risen by about 9.2% from 2017 to 2019. This trend was only further exacerbated by the COVID-19 pandemic, where low interest rates pushed the average home price in Canada upwards by 31.6% compared to the year prior.

The struggle to be able to call a place “home” has been fuelled in recent months by rising interest rates. In order to combat the tumble in purchasing power due to inflation, the Bank of Canada has steadily increased Canada’s key interest rate, effectively making cash more expensive. This has had the trickle-down effect of driving mortgage rates up, further dwindling hopes of purchasing a home for many individuals and causing some landlords to raise rent prices in a bid to meet their variable rate mortgage obligations. Amidst the multitude of factors that contribute to the current crisis of unaffordable homes—and the looming uncertainty of home ownership for future generations—a solution may exist in the form of modular or boxed homes.

A Modern Alternative to Traditional Home Construction

Modular housing is a one-hundred-and-eighty-degree twist to the traditional method of home construction (referred to as “stick-built” homes). While conventional houses are built completely on-site, requiring raw materials, significant labour resources, and often several years of time, modular (or factory-built) homes are prefabricated. The parts are manufactured in a factory before being transported to the home site and then assembled on a fixed foundation. Boxed (or mobile) homes also offer a similarly fresh approach to living with increased flexibility compared to modular housing. Boxed homes are fully manufactured in a factory and then transported to a home site for setup; unlike the other housing options, they can be disassembled and transported to a new location. It can be viewed similarly to Lego with its relatively flexible assembly process and lack of physical constraint to land.

There are three aspects that truly distinguish modular and boxed housing from conventional homes: price point, time, and environmental impact. While stick-built homes tend to be on the more expensive end of the spectrum due to inputs such as materials, labour, and time, modular and boxed homes are often more affordable as they use standard sizes and materials and require less labor to construct. As for construction time, since modular homes are built offsite in a factory and then assembled onsite, the construction process is often faster than traditional stick-built homes at approximately four months versus eight months. Boxed housing, or tiny homes, are also typically quicker to build (taking days to weeks) excluding installation, connection to utilities, and other final setup steps. When it comes to environmental impact, modular and boxed housing often have a lower environmental impact than traditional homes. The use of standard sizes and materials in modular and boxed housing also results in reduced waste during construction and a smaller carbon footprint.

The advent of modular and boxed housing presents tangible steps forward against homelessness and unaffordable housing. Without access to financial support, youth today will likely struggle for years just to afford down payments on traditionally built homes in major geographic regions, then being saddled with mortgages for the remainder of their lives. While modular and boxed housing can offer some a chance at affordable home ownership and better quality of life, they also act as an industry catalyst and can help spur creativity for new solutions to modern-day housing struggles.

The Benefits and Drawbacks: Modular and Boxed Housing Versus Stick-Built Homes

Modular and boxed housing offer several benefits compared to traditional homes. Other than the faster speed of construction, a benefit can be seen in the form of cost-effectiveness. These houses tend to be more affordable than traditional homes, as they use standard sizes and materials and require less labor to construct. The average home price in Ontario as of November 2022 is $829,934. It is estimated that similar modular houses tend to run about 10% to 20% lower than stick-built, whereas tiny homes can cost approximately $68,000 plus shipping/installation and other fees (although prices may range between ~$7,000-$100,000, depending on location, regulations, etc.). Modular and boxed homes are also often more energy efficient than traditional homes; they are built to strict energy codes (e.g., the Passive House Standard) and often utilize sustainable materials that emit less formaldehyde and volatile organic compounds for components like insulation and roofing. ‘Greener’ technology, in the form of solar panels, eco-friendly plumbing, and efficient rainwater management systems, are also often incorporated into prefabricated homes. Finally, modular and boxed homes can be optimal for people who want a home that is customizable and can be easily modified or expanded in the future. With some manufacturers now offering add-on ‘modules’ or layers, home-buyers may be able to select from a range of options, at fixed prices, to grow their residence over the years. On the other hand, expanding traditional housing (often called an ‘extension’ or ‘addition’), can be a tedious and several-month long project with a price tag of between $400 and $500 per square foot.

There are several drawbacks to modular and boxed housing compared to traditional homes. One potential disadvantage is that they may not be as customizable as traditional homes. Modular homes are typically built using standard sizes and materials, which means that the options for customization may be more limited than with a traditional stick-built home. Additionally, modular homes may not be as aesthetically pleasing as traditional homes, as they may not have the same level of detail, finish work, and material or design selection. Another potential disadvantage of modular and boxed housing is that they may not hold their value as well as traditional homes. As these types of homes are built using standard sizes and materials, they may not have the same level of uniqueness and character as a traditional stick-built home. This, combined with the limited awareness of modern housing options, can make them less desirable to potential buyers, which might ultimately result in a tougher time finding a suitable buyer and a lower resale value. Additionally, modular homes may be more difficult to finance, as some lenders may be hesitant to lend on them due to their non-traditional construction method. Boxed housing, or tiny homes, may also be less spacious than traditional homes, which can be a drawback for people who need or want more space, such as larger families.

An Optimistic, Yet Reasonable Future Outlook

Housing as we know it must evolve; modular—and soon, boxable—housing will likely be the avenue for change. Ensuring Canadians have access to a roof over their heads should have been a priority for the country through recent years and must be in coming years; recently announced plans by the government to ban foreigners from purchasing homes for two years is merely a temporary band-aid to a much deeper-rooted issue. Similarly, the proposition of a Tax-Free First Home Savings Account (FHSA), with an annual contribution limit of $8,000, is a delayed response that will take years for its impact—reducing the up-front burden of a down payment—to be realized by future homebuyers. A key lack of housing supply in geographic hotspots, combined with job vacancies in the construction industry, urbanization, poor economic planning, and unprecedented circumstances caused by the pandemic has created an unfavourable new standard in the housing market.

Although the dream of home ownership is quickly spiralling out of reach for many hardworking Canadians, there may finally be some light at the end of the tunnel. Through further innovation, advancement, and awareness, modular and boxed housing alternatives have the potential to achieve widespread social acceptance and shape the way future generations live. While current economic conditions may be the catalyst for the push towards new methods of home construction and living, environmental reasons are expected to become a key driver over the long-term.