Canada’s Housing Crisis Demands Smarter Building

July 29, 2025 – Canada is not building homes quickly enough to meet rising needs, and red tape combined with low productivity is intensifying pressure on the sector. A new report from the C.D. Howe Institute explores how innovative construction technologies could help accelerate delivery and improve efficiency – if supported by the right policy conditions.

In "Building Smarter, Faster: Technology and Policy Solutions for Canada's Housing Crisis," Tasnim Fariha outlines how innovative construction technologies – such as modular and panelized systems and mass timber – can enhance labour productivity in residential construction. While these approaches are not a silver bullet, they may offer valuable tools for increasing housing supply and managing construction workforce constraints. 

"Canada is facing a growing labour shortage and serious construction productivity challenges, which could have long-term consequences for our economic growth," warns Fariha, a Senior Policy Analyst at the C.D. Howe Institute. "This kind of innovative construction addresses these challenges by allowing workers to produce more within the same amount of work hours."

The Canada Mortgage and Housing Corporation estimates Canada needs to start building at least 430,000 units annually to restore affordability to 2019 levels, but only 245,000 homes were started last year. At the same time, nearly 260,000 construction workers are expected to retire by 2030, compounding the strain. Factory-based approaches can shift up to 60 percent of the building process off-site, offering greater control over costs, timelines, and labour use. 

“Scandinavian countries like Sweden have made extensive use of modular and mass timber construction, backed by coordinated policies and supply chain support,” says Fariha. “In comparison, Canada has moved slowly, with fragmented standards and limited incentives for adoption.”

The report does not recommend any single technological fix but calls on governments at all levels to create the conditions necessary for innovation to thrive. To unlock their full potential, it calls for targeted financial tools to incentivize investors, as well as streamlined permitting, harmonized building code interpretations, and workforce training support.

“The vision must go beyond funding. To build smarter and faster, we need to modernize the rules and support systems that shape how homes are built,” concludes Fariha.

Read the Full Report

For more information, contact: Tasnim Fariha, Senior Policy Analyst, C.D. Howe Institute; Raquel Schneider, Communications Officer, C.D. Howe Institute, 647-805-3918, rschneider@cdhowe.org.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

Want more insights like this? Subscribe to our newsletter for the latest research and expert commentary.