It's used and they're going to perform their challenge there. Honestly I could be wrong about it being the Insidious 4 house. It just feels a bit wrong that the facade is more involved in Face Off than actual Blumhouse.
For more context, the challenge is that the final contestants will create 2 characters for a short film based off of a story from "The Blumhouse Book of Nightmares". The story, "Hellhole" by Christopher Denham, is about a family that moves into a house that's haunted with a demon and a portal to hell.