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The Canadian Home Builders’ Association Central Okanagan (CHBA-CO) has become the latest voice to sound the alarm over rising development costs for new homes as these charges take a bite out of the middle-income market.

“The cost is too high for what you can sell,” said Cassidy deVeer, CHBA-CO executive officer.  

While governments have stepped into to fund low income and rental housing, there is a failure to address middle-income housing needs, she said.     

For small-scale builders trying to deliver infill or missing-middle housing, development charges often determine whether a project proceeds or dies, she said.

“And of late, they have been dying.”

DeVeer said homebuilders going to banks are finding when financiers crunch the numbers for land costs, development fees and construction, the numbers surpass what the market is willing to pay. Even infill housing has become expensive.

”For a carriage house (with a basement suite) your development costs can be over $25,000 per unit,” she said, adding these costs attached to infill housing are to subsidize infrastructure services, but many are already in place.

Today, she said, with fees and other municipal charges, the cost of building a carriage house can run from $700,000 to $1 million.

DeVeer said there needs to be greater collaboration between the municipal, provincial and federal authorities to reduce the overall cost of building new homes for middle-class buyers.

Residential construction has been one of the economic drivers stabilizing the area’s economy during the pandemic but now new home starts have faltered and Kelowna has one of Canada’s highest unemployment rates with bankruptcies at 10 per cent annually. Some builders have not pulled a building permit for two years, she said.  

“Builders are now leaving,” she said, and heading to Alberta.

In 2025, 130 new single-family homes were built in Kelowna, while the 2021-2014 annual average was more than 300. While the city has pre-approved home designs in place, they are what the middle-class or entry level markets want, she said.

The City of Kelowna has fired back at the CHBA-CO in a press statement that it says “corrects some inaccuracies.” 

Kelowna said it cannot change the fact demand for new housing is significantly lower than it was during and shortly after the COVID-19 pandemic and that interest rates and costs have risen in recent years. Builders in cities with fees that are both higher and lower than Kelowna are also struggling to make projects viable, it said.

“With respect to Development Cost Charges (DCCs), the City of Kelowna has only increased DDCs by approximately 2.5 per cent since 2022, despite the costs to deliver growth-related infrastructure having increased by nearly 35 per cent during that same period,” it said, adding it does not apply an Amenity Cost Charge (ACC) or a regional DCC to development approvals.

A report on barriers to infill housing development and recommended actions is expected to be before council by spring, while city staff is looking at options for council to consider changes to fees and charges for the development community. A study is underway to consider opening more land for significant residential, commercial and industrial development.

In 2024, the Homebuilders Association of Vancouver (HAVAN) has released a critical report on Bill 46: Development Financing. The bill, passed in 2023, introduced new development charges that increased the financial cost of homebuilding.

HAVAN said combined with rising construction costs and broader economic uncertainties, the implementation of ACCs and new DCCs for essential services like fire, police and solid waste facilities has led to steep fee increases and that 73,000 homes approved across the region remained unbuilt. The report urged collaboration between all stakeholders to overcome the growing financial challenges hindering housing delivery.

In November 2025, Canadian Home Builders’ Association (CHBA) chief executive Kevin Lee was critical of the federal budget for failing to help the middle class achieve home ownership.  

“The budget unfortunately retreats from the Liberal platform’s commitment to work with municipalities to reduce development taxes by 50 per cent. Over the past two decades, these taxes have soared by 700 per cent, pricing countless Canadians out of the market. The budget does propose a new Build Communities Strong Fund, which will provide housing-enabling infrastructure funding to provinces that commit to substantially reduce development charges, but no details have been provided,” the CHBA said in a press release.  

In December 2025, CMHC released Canadian data that puts development cost numbers on   new home acquisition. The Canadian study found fees range from $39,000 to $121,000 or eight per cent to 16 per cent on the purchase price for a two-bedroom condominium depending on the city.

For detached homes, the charges run from $125,000 to $180,600 with Toronto hitting the highest with an average of $130,200 for condos and $180,600 for detached homes.

In B.C., Coquitlam has the highest development costs with a two-bedroom condo at $62,104 and a detached home at $112,817.

Vancouver was not included in the study as its development costs were too complex to gauge for a comparison, according to the CMHC.

CMHC research found Canada needs to double its housing starts over the next decade with 430,000 to 480,000 units per year to restore affordability.