Housing Minister Scott Kent wants to create a territorial program to help spur home ownership.
“We have a lot of people that are in rental right now that aren’t able to save that down payment and move into the entry-level housing,” said Kent. “There’s a stalling in the housing continuum.”
High rental rates, ballooning house prices and now stricter mortgage rules have all made the dream of owning a home increasingly difficult to achieve.
So Kent has directed the Yukon Housing Corporation to look at model programs from around the country. One example is the Attainable Homes Calgary Corporation.
Established in 2009, the non-profit organization tries to help middle-income families buy houses. It does that by buying large blocks of condos and negotiating favourable deals with developers.
The five to 10 per cent that they’re able to save off the top is rolled into a small equity stake for the new owners.
“What we do is reduce the price with the builder so we have enough room for the down payment. We build that back into the purchase price so that their mortgage amount is reflected as an amount between five and 10 per cent below the actual cost,” said Tara Cooney, the sales and marketing manager for Attainable Homes Calgary.
The people it helps still have to qualify for a regular mortgage through a bank.
“Obviously they have to have good credit and all of those kind of things,” she said. “Really, it’s the same as you or I going out and purchasing a home, with the exception of, because of the high cost of rent or their personal circumstances, they simply haven’t been able to save up for the down payment.”
Those are exactly the kinds of people that Kent wants to target in the Yukon.
“Its not a new idea that we’re coming up with, but it’s new to the Yukon, obviously,” he said. “I think that this model has proven itself in areas with similar market conditions, or even more extreme, such as Calgary.”
But while Calgary’s housing prices are similar to those in Whitehorse, the market pressures are very different.
When Attainable Homes was formed three years ago, the Calgary housing market had found itself sideswiped by the recession.
“We saw that there were a lot of properties that were partially under construction or stopping because there was so much supply, and suddenly there was no demand,” said Cooney. “We figured that builders would be a little bit more willing to look at a program such as ours, that would buy a large number of units, because it certainly helps from their financing perspective.”
Kent hasn’t yet decided what sort of program to use. “There are a lot of different models. We just want to make sure that we come up with one that will work for those that we are trying to help,” he said.
Whatever the government decides to do, it should proceed with caution, said Keith Halliday, a Whitehorse-based economist.
“I think that the experience that lots of countries have had during the housing bubble and the financial crisis has shown that there can be unintended consequences and risks around programs like this that encourage people, sometimes prematurely, to get into the housing market,” he said.
What the Yukon really needs is a “supply-side solution” to spur the creation of more affordable housing, said Halliday.
Whistler and Vancouver have both developed initiatives that used cheap public land to build entry-level housing below the market rate, he said.
“Demand-side initiatives can use public money to reduce the pain for a small number of beneficiaries of the program, but they don’t necessarily result in more units being built in the housing market,” said Halliday. “Economics teaches us it’s about supply and demand together, and the government should have a balanced portfolio of initiatives on both sides.”
There is some action on the supply side. This summer, construction will continue in the Ingram subdivision, and lots will be issued by lottery for the first phase of Whistle Bend subdivision.
On Monday, Yukon MP Ryan Leef and Kent celebrated the completion of six new social housing units in the Takhini subdivision with a ribbon-cutting ceremony. Those units, along with 14 others in Ross River and Carmacks that are almost finished, were paid for with stimulus money from the federal government. Since 2009, that fund has allowed the Yukon Housing Corporation to add 139 new units to its stock.
But even with all that, the Yukon government simply isn’t doing enough, said Kate White, the NDP’s housing critic.
“First and foremost, the Yukon Party government needs a housing strategy,” she said.
The recent failure to attract private interest to build affordable housing on Lot 262 and the impending conversion of apartments at Sternwheeler Village into condos are cases in point, said White.
With $13 million in affordable housing money still sitting in the territory’s coffers, it’s not a question of resources, she said.
“We’re waist-deep in the housing crisis and we’re going to investigate (an attainable housing strategy) as a possible solution, said White.
“This is step in the right direction, but it’s too little.”
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