Potential Pathways to Scale Innovative Construction Methods in California
Published On March 2, 2026
Amid a deepening housing crisis, innovation in housing construction has emerged as a promising pathway to lower costs, shorten development timelines, and increase housing production.
Industrialized construction (IC) applies practices from manufacturing to housing design and construction—including prefabricated building elements assembled off-site and other advanced construction methods. Despite the potential to deliver predictability, enhanced quality control, and economies of scale, the industry has struggled to scale in California.
A Terner Center report focuses on the role the State of California can play in supporting construction innovation and reducing barriers that prevent promising methods from achieving scale and increasing housing production. The report provides evidence-backed research to support legislative efforts of the California Assembly.
This report highlights 40 potential policy actions that stakeholders suggested across seven broad themes to guide the legislative agenda, including stakeholder perspectives on their impact and relative cost to the State. It also highlights areas for future research.
The ideas seek to address a variety of issues related to risk, certainty, and liability:
- attend to fragmentation in the building code and uncertainty in enforcement through building code reform
- increase consistency and replicability through reforms to standards and processes
- reduce financial risk and liability to encourage industry growth
- address the uncertainty of project pipelines through demand aggregation
- develop a strong workforce now and for the future
- modify existing State funding streams to reflect the realities of factory-built housing
- address negative perceptions of risk through education and data
The report reflects perspectives from market-rate and affordable housing developers, general contractors, off-site manufacturers, architects, investors, lenders, building trades unions and carpenters union members, state and regional government staff, building code experts, and representatives from companies using emerging technologies.
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