Hamilton’s residential development industry says it’s on the ropes in a struggle with taxes and fees that are adding tens of thousands of dollars to the price of new homes during a severe market downturn.
Without significant relief from all levels of governments, the knockout blows will keep landing as the job losses mount and more projects are put on ice, industry representatives warn.
“We are asking municipalities to provide temporary emergency relief to save jobs and get shovels in the ground,” said Mike Collins-Williams, CEO of the West End Home Builders’ Association.
Jeff Paikin says “there’s no point in not reducing the price (of new homes) … It makes no sense.”
The Hamilton Spectator file photo
Sales at New Horizon Development, a longtime local builder of condos and townhouses, are down about 98 per cent compared to three years ago, president Jeff Paikin says.
As a result, the firm’s workforce is down to roughly 30 from the 117 it was in better times, he says.
“There’s not one of them we would have chosen to leave our company … They were all exceptional people.”
But work has evaporated, says Paikin, noting none of New Horizon’s condo projects in Hamilton, Burlington and Oakville are going ahead as planned.
They’re either paused or pivoting to rental, which doesn’t depend on presales to secure construction financing, a formidable hurdle for condo builders these days with the cratering market.
That includes another look at what was initially planned to be a 900-unit condo and townhouse redevelopment of the old Delta Secondary School in east Hamilton, Paikin offers as an example.
New Horizon Development is reassessing its plan to redevelop the old Delta Secondary School in east Hamilton.
Cathie Coward/The Hamilton Spectator
“The condominium market is not coming back next week and we’ve got people to put to work next week.”
Various industry watchers agree, including real-estate research firm Zonda Urban, which says more pain is in store for the collapsing Greater Toronto and Hamilton Area market.
In 2025, only nine projects with 1,289 units opened for sale, representing a massive decline of 80 per cent from 2024’s already-diminished total of 6,587 units, and “far below” the 101 projects (28,985 units) that launched in 2021.
If things don’t improve, more than 100,000 jobs could be lost in the next five years in Ontario, Altus Group estimated in an analysis done in December 2025.
Nearly 2,000 construction jobs were shed in Hamilton in 2025, noted Collins-Williams, whose association represents more than 300 members in Hamilton and Halton Region.
That was apparent in a recent discussion with local developers, who shared that upward of half of full-time payrolls were let go in the last year. “They’re being decimated.”
‘Market can no longer bear it’
The dizzying climb in home values during the COVID-19 pandemic, along with a rise in historically low interest rates, spiking material costs and outpriced buyers have led to a glut of unsold condo inventory.
And while prices for resale homes have come down to earth, developers say the cost of building new products is still too high to compete with that element of the real estate market.
The crash comes amid a number of factors, observes Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives.
“Overall, we are seeing a major failure of the investor-led condo model in Canada. That worked really well as long as prices were going up every year.”
Some of that was driven by speculative investment, says Lee, pointing to the purchasing and flipping of condos that added significantly to sales value while developers also paid too much for land.
But even before the peak in 2022, and subsequent collapse, there had been a “massive run-up in prices” that left homes out of reach for many.
For their part, builders are focused on the 13 per cent federal-provincial harmonized sales tax (HST) on new homes and municipal development charges, which they say have made for a stiff one-two punch.
When the market was healthy, developers could absorb the rising fees, Collins-Williams says.
“Today, the market can no longer bear it and the system that we created in the price run-up in the previous decade is broken.”
Development charges are fees that municipalities issue under provincial legislation to help pay for infrastructure like sewers, roads, fire stations and recreation centres needed to service growth.
Offering discounts means finding other sources of funding, municipal officials maintain, pointing out the challenge of making up for lost revenue if not backstopped by senior levels of government.
“If municipalities want to pay those costs through taxes and water and wastewater rates, municipalities can pay those costs, but practically, that would be extraordinary,” said Mike Zegarac, Hamilton’s general manager of finance and corporate services.
Amid the debate, Hamilton and other municipalities, which already face growing infrastructure backlogs, have called on the province to “make them whole” amid legislated development-charge holidays.
“In fact, we’re going in the opposite direction, where more and more of the city’s abilities to raise these funds is being eroded through provincial legislation,” Zegarac told The Spectator.
Developers, meanwhile, complain the municipal charges, which have escalated for years, can add more than $100,000 to the cost of homes, which is passed on to buyers in larger GTA markets on top of the HST and other fees.
“They’re actually taking it from the purchaser,” Paikin said. “And now there’s just no more to give. I mean, you can’t squeeze any more juice from the orange.”
Governments became “punch drunk” on tax and fee revenues, but now that the stream is drying up as construction activity grinds to a halt, “they’ve basically cooked their own goose,” Peter Turkstra says.
The Hamilton Spectator file photo
The residential construction sector’s pain also flows downstream, says Peter Turkstra, CEO of the longtime local lumber chain that bears his family’s name.
“We could easily be out of business,” said Turkstra, noting he has kept his roughly 300 workers on the job through a series of measures, including wage freezes and dipping into savings.
Turkstra, through online videos and letters to government officials, is calling for the waiving of HST for all new home purchases and significant discounts — or elimination altogether — of development charges for at least two years.
Governments caused the crash, he argued, “so they have to change their policy or kill their industry.”
They became “punch drunk” on tax and fee revenues, but now that the stream is drying up as construction activity grinds to a halt, “they’ve basically cooked their own goose,” he said.
In response to market woes, the provincial and federal governments have committed to eliminating HST for first-time buyers of new homes priced up to $1 million, with Ottawa offering reduced GST for homes between $1 million and $1.5 million.
The Ontario government didn’t respond to The Spectator’s request for comment about the industry’s call for more relief and municipal entreaties for infrastructure-funding relief.
But in an emailed statement, the federal Ministry of Finance said “addressing Canada’s housing crunch necessitates cross-jurisdictional collaboration with the provinces and municipalities alike.”
Between the federal and provincial HST/GST programs, total savings for first-time homebuyers would translate into as much as $130,000.
But limiting the relief to first-time homebuyers isn’t enough, Turkstra maintains. “Because first-time homebuyers represent a minority of the buyers in the market.”
‘Significant projects, significant outlays’
With builders grumbling over their bottom lines and cities fretting over limited revenue tools, development charges have long been a prickly issue in Ontario.
And no less so nowadays as municipalities respond to the residential sector’s calls for relief, not to mention amid concerns over United States-imposed tariffs.
Burlington is debating whether to fully waive the fees for two years in a bid to jump-start ailing projects, while Hamilton has instituted a 20 per cent discount for all types of developments over the same duration.
Turkstra calls the latter concession “a joke,” but Mayor Andrea Horwath recently told reporters the city is “stepping up” and taking a “responsible” approach, noting the municipality faces considerable fiscal challenges.
City finance staff have hammered home that, absent provincial or federal infusions, any relief in development charges means tapping other sources for future infrastructure, including through property taxes and water rates.
For instance, the temporary 20 per cent discount is estimated to cost $9.6 million per year, an amount that was to be covered by funds set aside in the city’s 2025 budget.
Municipalities can choose to offer fee exemptions for certain types of development, but the province also obliges them in some cases. Of the estimated $75 million in exemptions Hamilton made in last year, 81 per cent resulted from provincial breaks, such as for non-profit housing and family-friendly rentals.
Overall, staff forecast spending more than $4 billion on growth-related infrastructure in 10 years. The expectation is that $2.7 billion will come from development charges.
As of December 2023, Hamilton’s development charge reserve balance stood at about $550 million. Staff expect to provide updated figures later this year, but as development slows, so is the amount of fees that are collected.
In 2021, the city collected $114.8 million in charges, but the estimate for both 2025 and 2026 is about $48 million.
Nonetheless, with such eye-popping reserve balances, critics of development charges argue municipalities have less-than-clear spending plans.
“They pile up these reserves that come from development charges and exactly where that money is going to be spent is sometimes pretty hazy,” said Andrew Sancton, a professor emeritus of political science at Western University.
Hamilton’s Zegarac, however, counters the city’s plans for development charges, which are determined through involved background studies, are transparent and subject to public scrutiny and appeals.
And most of the city’s reserve balance is committed to approved growth-related projects that will draw down their allotments as they advance, he says.
“The point I’m trying to make is these are significant projects with significant outlays, and we’re not going to fund these immediately. They’re funded through all of the development that’s going to benefit from that facility over decades.”
Dajun Taylor, assistant manager at Turkstra Lumber’s Dundas location, takes a load to the stock pile in the lumber yard.
Cathie Coward/The Hamilton Spectator
‘Sticky downward’
If development charges were “significantly lower” than they are, it would be better for people trying to enter the housing market, says Sancton, who advocates for a gradual transition to more municipal borrowing.
“I don’t think there’s anybody who would say that borrowing for a big capital project is a bad thing. As a matter of fact, it’s generationally fair.”
Just how much market-driven home costs could drop if development charges are less of a factor is tough to gauge, says David Amborski, a professor at Toronto Metropolitan University’s School of Urban and Regional Planning.
“Prices are always sticky downward,” said Amborski, but suggested fee reductions would at least “mitigate” increases over time.
“Developers, if they want to sell and people can’t afford it, (and) if they have the room to reduce prices, they will.”
Lee, of the Canadian Centre for Policy Alternatives, says when it comes to paying for infrastructure, “everyone’s pointing fingers at the other guy,” but it has to come from somewhere.
Meanwhile, he’s “super skeptical” developers would drop prices in line with fee reductions. “I feel like the industry’s playing a fairly cagey game on this because they stand to make a lot of money.”
New Horizon’s Paikin says that, without question, his firm would lower prices substantially to get staff back on the job and sell homes.
“Oh, a hundred per cent because there’s no point in not reducing the price … It makes no sense.”
That would have a “definite ripple effect” with market competition forcing down prices, Paikin said.
Eventually, prices would rise again, he suggested.
But they’re “highly unlikely to return to anywhere near the unaffordable prices that killed the market.”
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