When builders GO BUST

At least 27 Ontario developers have gone into receivership this year, putting hundreds of homes at risk and pushing buyers to the wall -

- CLARRIE FEINSTEIN

At least 27 Ontario developers have gone into receivership this year, a higher number than the province has seen in years. It’s an alarming spike that experts say puts hundreds of housing units in jeopardy and puts preconstruction buyers in limbo — with their life savings on the line.

“The new-build space is utterly dead,” said lawyer Mark Morris, with real estate firm Legalclosing.ca.

According to Insolvency Insider, a data base that tracks the largest insolvencies in Canada, 18 receivership filings were reported for Ontario developers in 2023, with 16 filings in 2022, 19 filings in 2021 and 15 in 2020 — numbers based on “reporting on larger court-appointed receiverships,” said Dina Kovacevic, editor at Insolvency Insider. The court orders are available on the receivers’ websites.

Over the past couple of years cracks in the homebuilding industry have begun to show. StateView Homes collapsed in the middle of 2023 after defaulting on hundreds of millions of debt, leaving hundreds of homeowners in the lurch. Mizrahi Developments went into receivership in October 2023, with the future of The One — an 85-storey luxury tower at Yonge and Bloor streets — unknown.

Experts say the trend may continue for years as builders struggle to finish projects due to a volatile economic landscape. Elevated construction and materials costs, labour shortages and high interest rates have devastated projects, with dozens of builders owing multi-millions to their creditors.

“We’re seeing more developers and builders go into receivership and that number will continue to rise as interest rates remain high, buyers are unable to close, and materials costs are up,” said licensed insolvency trustee Joshua Harris of Harris & Partnersbased in Toronto.

“Buying preconstruction was an exciting business five years ago, but people are holding on for dear life at this point.”

Consumers left in limbo