Two new model homes, just erected on one of the busiest highways in Canada, are attracting a lot of attention. One is a stylish bungalow ideal for a young family or for empty nesters; the other is a two-storey cottage that will have a lot of appeal for those driving by on the way to Ontario's cottage country. The homes, like many other modern new home developments, have top-quality finishes and plenty of custom features.

But drivers zipping by on Highway 400 near Cookstown, Ont., won't realize that these homes represent both the wave of the future of home building in Canada, and also the industry's "best-kept secret", says Quality Engineered Homes president Douglas Penson.

The houses were built in a factory in Kenilworth, Ont., trucked several miles in large modular packages, placed on foundations with a crane, and then finished off in just a couple of weeks.

"Factory building has come of age," says Penson. "If we look to places like Japan and throughout Europe where factory-built housing is comprising at least half of the new homes being constructed, we get a sense as to where our industry should be heading in Canada."

Factory-built homes are not new -- the Canadian Manufactured Housing Institute (CMHI) is celebrating its 50th anniversary this year -- but they've always struggled to build a significant market share in Canada, where "stick-built" on-site framing dominates the industry. That's about to change, say manufacturers, because several current trends point to factory-built housing as the wave of the future.

"There are significant benefits to a quality controlled factory setting such as not dealing with harsh climates, reducing wasted materials, duplicated on-site resources and labour compared to those of a traditional site building," says Howard Sher, Quality Homes' executive vice-president. "Building homes in a controlled environment ensures customers move in on time and on budget."

The home building industry is under the gun to become more efficient and productive, as high taxes and increasing building materials costs drive up prices. Factory-built homes can be considerably less expensive than conventional homes, say the manufacturers.

The Manufactured Housing Association of Alberta and Saskatchewan says the average price of a manufactured home ranges from $55,000 to $65,000, and that they can be purchased for as low as $43 to $53 per square foot. Quality's prices range from $70,000 to $400,000, but none of these prices include land costs. Landlease communities are becoming more popular in Canada, which allows buyers to place their homes on leased lands and reduce their monthly housing costs. Manufactured homes also qualify for high-ratio mortgage insurance, enabling buyers to purchase homes with a five per cent downpayment.

Building in energy efficiency is also easier in a factory. For many years, manufacturers have been creating homes built to Canada's R-2000 standard, producing homes with the highest level of energy performance. Manufactured homes also offer an endless range of design options, and are designed to take full use of all the available space.

Despite all the advantages, Penson says the industry's biggest challenge is "getting the word out" to consumers about the benefits of manufactured housing. That's why his company decided to open the model home court at the high-profile location in Cookstown. Quality, one more than 50 manufactured home companies in Canada, expects to sell about 300 homes this year. But about 20 per cent of the company's sales are exports, primarily to Michigan and Illinois.

Canadian firms exported $561 million in manufactured housing in 2001, a 14 per cent year-over-year increase, and the CMHI says 2002 shipments to the United States were more than 30 per cent higher than in 2001.

Hank Starno, president of the Manufactured Housing Institute of Canada, told a 2002 conference that although Canada's manufactured homes and components sell well around the world, a lack of adequate distribution channels hampers growth at home. He says Canada's small local builders are so efficient that it's a tough market for manufacturers to crack.

But Penson says manufactured housing is the wave of the future. "I used to be into stick building, and I can tell you, manufactured housing is the way to go," he says.

Published: July 17, 2003

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .