On the line

Why not build houses in a factory? On an assembly line?

No weather to hold you back. Materials stacked, dry and ready at each stage of construction. Comfortable working conditions for the trades. Predictability and controlled costs. Finished houses – right down to the switch plates – popped out the big loading doors, onto a flatbed and then plopped on the foundation.

First nail to finished house ready to be bricked and hooked to services: about 10 days.

That was Peter Gilgan’s vision. The Mattamy Homes founder and boss was the first person in Canada to drag the archaic process of residential construction into the new age. For a while, anyway. Almost twenty years ago he toured me around his hulking white plant in the mushrooming town of Milton. The media tagged along, too.

Can an assembly line chop the price of housing?

A house  factory near Toronto 17 years ago. The guy behind the project says he’ll do it again. 

Source: CTV

Well, Miton got built out. The Mattamy plant came down. Since then the the old ways have returned. These days homebuilders are in tough shape with buyers refusing to show up and unsold inventory stacking. The average price of a new-build in the Toronto area, for example, is $1.5 million – which includes townhomes and row houses as well as detacheds.

One of Mark Carney’s Big Ideas is to do what Gilgan did all those years ago, and take the construction dudes indoors. The future of affordability may be modular and pre-fab, so Gilgan’s getting back into the game. (He’s now a billionaire, which makes things easier.)

This week Gilgan unveiled plans for Stelumar Advanced Manufacturing – a giant new facility to be located somewhere in the GTA, employing 300 workers who will churn out component parts – first for low-rise condo projects, then individual houses. Projects that took three years to build, he says, will be done in six months. Throwing a house together will be 50% faster.

As for costs, the discount over a site-built structure will be about 20%. In real dollars (in that market) this translates into roughly $300,000. Gilgan says he learned a lot after the Milton assembly-line experience (where he claims Mattamy lost money), and new technologies will allow for both profits and houses people can afford.

Why not? Nothing else has worked.

Now, let’s flip to the nightmare spreading across the world of Canadian landlords. It’s estimated half of all the apartment units in major Canadian cities are held by investors. Some are corporate outfits. Most are mom-&-pops. When mortgage rates were low, house prices romping and tenants competing for a lease, picking up a highly-leveraged, little-cash-down rental unit was a no brainer.

No more.

Provinces have tilted landlord-tenant legislation dramatically in favour of renters. Investment mortgages that were under 2% during the pandemic are renewing at twice that rate. The hikes in condo/strata fees and property taxes are relentless. Tens of thousands of new units have hit the market. And the feds tapped the brakes hard on immigration, which means (for example) a whole lot fewer international students looking for a place to crash.

All his has brought the one outcome chilling these rentiers fear most: falling rents.

The national average, says Urbanation and Rentals.ca, has dopped about 3% year/year at the same time landlord costs have gone up. This is the eighth month running for declines. There is more to come.

Purpose-built rentals (apartment buildings) are down 2% to an average at just over $2,100/month and condo rents are off closer to 4%, at about the same current price. Rents for houses and townhouses have careened lower 7%.

“The easing in rents this year across most parts of the country is a positive for housing affordability in Canada,” says Urbanation, “following a period of extremely strong rent inflation lasting from 2022 to 2024.”

True. Rents have popped about 4% a year for the last five. But now they’re pacing the residential real estate market, which is sinking slowly but profoundly. It’s all good news if you’re after a lease – lower monthly costs, no line of 30 bidders ahead of you, and landlord perks like free transit passes, free furniture, free cable or even free health care benefits.

For mom-and-pop landlords who leveraged up their house to buy a condo or two because, you know, real estate always goes up, it’s a mess. Recall that over 40% of all landlords were in negative cash flow even before this real estate reversal. They were happy to hang on because the capital gains outpaced the losses.

Well, no more. Tens of thousands are shedding wealth every month as they subsidize tenants in depreciating units. Worse, they can’t sell. There are close to 40,000 new and resale units on the market in the GTA alone. Competition is insane. Buyers know it.

Moral: next time get a REIT.

About the picture: “Ashely Bell and Daisy… on the road ahead was a deer, thank goodness,” writes Kim. “I wasn’t dragged thru the wilderness!  Other times, off leash, they both will take off after squirrels, marmots and the occasional deer.  They usually get tired then stop to see if I am coming with them on the chase.LOL!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’

Source: https://www.greaterfool.ca/2025/06/11/on-the-line/