On December 16, Ontario’s Progressive Conservative government announced that it would be pulling the $1 billion in funding that had been earmarked for Hamilton’s much debated LRT system, swiftly putting an end to a project that had enjoyed growing support within the city.
Astronomical cost overruns were blamed for the cancellation, but the $5.5 billion price tag affixed to the LRT by the PCs has been called into question, as it incorporates projected costs having little to do with the line’s initial construction.
“They’re artificially inflated,” says St. Jean Realty’s Michael St. Jean of the government’s figures. “They added in 30 years worth of operational costs on top [of the estimated building costs]. I don’t think anyone believes that the reasons we were given for the cancellation were legitimate.”
Nevertheless, Hamilton has proven to be nothing if not a resilient city. While the LRT proved to be a major selling point for investors, it’s cancellation should not be considered a red flag.
“The fundamentals are very strong in Hamilton regardless of the LRT,” says Rock Star Real Estate’s Paul D’Abruzzo. “It was more icing on the cake than anything.”
Both D’Abruzzo and St. Jean feel that the only investors at risk of being hurt by the LRT’s demise are speculators.
“On a very micro level, if you were buying a home within a few blocks of that line specifically because you thought the LRT is coming, then definitely it’s a little bit of a disappointment,” St. Jean says. “Do I think that investors are not going to invest in a massive Canadian city because of [that]? I don’t. Hamilton was exploding prior to there even being any hopes of a single LRT line running from west to east in the downtown.”
Hamilton’s market is still very much on the upswing. It’s affordable, the city’s professional class, driven by a robust healthcare sector, is diversifying, and its proximity to an overheated and painfully expensive GTA has made it an increasingly popular landing spot for new international arrivals who simply can’t afford to start a new life while paying Toronto rents.
And, according to D’Abruzzo, many of these new Hamiltonians possess two things that bode well for the future of the city’s real estate market: disposable income and youth.
“That’s a good sign for the city’s economic stability going into the future,” he says.
The PCs are still committed to spending the $1 billion that has been budgeted for Hamilton’s transit system, but what form it will take remains undecided. Also a mystery is what Metrolinx, the project’s one-time manager, will do with the $150 million worth of prime downtown property it acquired in the run-up to the LRT’s cancellation.
“I don’t think the province even knows,” St. Jean says. “I don’t think they know what they’re doing as far as plans go. Cancelling is one thing but picking up the pieces is another.”