No silver bullet, just steel rivets

Housing is one of those issues that does poorly in our system of government. It's complex, immune to quick fixes and requires both big investment and long-term planning.

By the time you hear a politician say “housing crisis,” it’s already too late. It will take years to build the houses and apartments needed right now.

Housing is one of those issues that does poorly in our system of government. It’s complex, immune to quick fixes and requires both big investment and long-term planning.

Consider some of the root causes of housing problems. The first is timing.

When prices go up, it takes years to acquire land and build units. A few years later, too many people have built too many units and there’s a glut.

For bigger projects, the timeline is even longer and more uncertain.

Whitehorse lots planned during the first pipeline mania in the 1970s weren’t occupied until 20 years later. It’s a recipe for boom and bust.

Second, there are a bunch of biases to building larger, more expensive units.

In 1950, the average home in North America was 1,000 square feet. This had doubled by 2000, despite the number of people in the average household falling from four in 1950 to 2.5 in 2006.

Also, the quality and cost per square foot has gone up, thanks to modern conveniences, better insulation and safety features. People like larger houses and developers make more money building them. Governments like to show how green and safety conscious they are by layering on new building codes and regulations. This may all be good stuff, but it drives cost per unit up.

The third, and thorniest, issue is unintended consequences.

Housing has lots of policy traps. If you build large apartment blocks to get a low cost per unit, you get nightmarish “projects” like in Detroit.

If you regulate rents, landlords stop investing in new units.

If you provide too much government housing, it’s expensive for taxpayers and reduces private incentives to invest in housing. A plethora of US government housing schemes were at the heart of the recent financial crisis.

So what would an economist suggest?

Let’s look at three things: cheaper units, variablizing supply and making the price mechanism work.

A bunch of things are needed to reduce the cost per unit. A review of zoning and building code regulations has to be done to identify things that bias the system against smaller, cheaper houses.

This doesn’t mean throwing the environmental and safety improvements of the last 30 years out the window. It means identifying those regulations that have low benefits, but constrain new developers as well as granny suites.

It also means figuring out how to develop new lots more cheaply.

It is staggering that it can cost more to buy a new empty lot now than an entire house 15 years ago.

People often suggest letting private developers buy land from the government and put in the streets and sewage systems. But this won’t fully work unless we think again about how we design subdivisions.

My hypothesis is that the big lots, wide roads and other fine infrastructure we put into today’s subdivisions would look different if we were really trying to achieve lower costs per lot.

“Variablizing supply” means moving towards a market where there can be small additions to the housing stock rather than once-in-a-generation mega-developments. It probably means we should have been pushing harder five years ago to open up more infill and 10-lot parcels every year.

We should also have been encouraging more basement suites and laneway housing (that’s putting a small unit in your backyard).

This would have allowed people to add supply in small amounts as prices began to rise.

As a result of our slow response, average house prices have more than doubled since 2005 and vacancy rates have fallen from three or four per cent to a very tight one per cent.

As for unintended consequences, you want to avoid rent controls and open-ended subsidies. These blunt the price signal and are usually bad in the long run. Instead, if the government wants to encourage certain things, then find targeted, time-limited ways to spend tax money.

For example, let people pay market rents (which encourage new construction), but subsidize low-income families on a monthly basis during boom years. Instead of subsidizing all house construction, for example, ask developers to come forward with affordable housing proposals.

Tell them they would have to lock rents at today’s median rent of $785 per month, and ask them how much subsidy they’d need to do so. Then choose the cheapest proposals that come forward (assuming they meet housing standards of course).

You’ll see that there is no “silver bullet.” Just lots of “steel rivet” initiatives that multiple levels of government need to co-operate on.

If the next government – of whatever party – is to be successful on housing, it will have to co-ordinate a coherent program across many departments and also with municipalities, First Nations and the feds.

It’s also critical to get started yesterday, due to the long lead times. October frosts may chase away the housing protest tents on the legislature’s lawn, but the housing crisis won’t disappear so quickly.

Keith Halliday is a Yukon economist who writes a weekly column for the Yukon News called Yukonomics.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

City of Whitehorse’s Selkirk pump house on Selkirk Road in Riverdale on Jan. 26. Whitehorse city council decided Jan. 25 that there will be no advantage for local firms planning to submit proposals for the final report and design of a second barrier water treatment project for the Selkirk pump house. (Crystal Schick/Yukon News)
No local content weighting on pump house contract

Work will see design for water treatment system

The Yukon Workers’ Compensation Health and Safety Board is issuing $10 million in rebates to employers this month. (Crystal Schick/Yukon News)
Yukon employers to receive $10-million in rebates from Workers’ Compensation Board

Eligible employers will receive cheques based on total premiums paid in 2020

Connie Peggy Thorn, 52, pleaded guilty Jan. 27 to manslaughter in the 2017 death of Greg Dawson. (Crystal Schick/Yukon News file)
Whitehorse woman pleads guilty to manslaughter in death of Greg Dawson

Connie Thorn, 52, was arrested in October 2019 and pleaded guilty in Supreme Court on Jan. 27.

Abigail Jirousek, left, is tailed by Brian Horton while climbing a hill during the Cross Country Yukon January Classic in Whitehorse on Jan. 23. Jirousek finished second in the U16 girls category. (Crystal Schick/Yukon News)
Cross Country Yukon hosts classic race

Cross Country Yukon hosted a classic technique cross-country ski race on Jan.… Continue reading

Yukon Premier Sandy Silver talks to media on March 5, 2020. The Yukon government said Jan. 25 that it is disappointed in a decision by the federal government to send the Kudz Ze Kayah mining project back to the drawing board. (Crystal Schick/Yukon News file)
Territorial and federal governments at odds over Kudz Ze Kayah mine project

The federal government, backed by Liard First Nation, sent the proposal back to the screening stage

Yukon RCMP’s Historial Case Unit are seeking the public’s help locating Bradley MacDonald, a 42-year-old man who has been missing since Aug. 5, 2019. (RCMP handout)
Historical Case Unit seeks man missing since 2019

Yukon RCMP’s Historial Case Unit are seeking the public’s help locating a… Continue reading

Yukon RCMP said in a press release that they are seeing an increase in tinted front passenger windows and are reminding people that it is illegal and potentially dangerous. (RCMP handout)
RCMP warn against upward trend of tinted windows

Yukon RCMP are seeing more vehicles with tinted front passenger windows, prompting… Continue reading

An arrest warrant has been issued for a 22-year-old man facing two tickets violating the <em>Civil Emergency Measures Act</em>. (Joel Krahn/Yukon News file)
Arrest warrant issued for CEMA violation

An arrest warrant has been issued for Ansh Dhawan over two tickets for violating CEMA

The office space at 151 Industrial Road in Marwell. At Whitehorse city council’s Jan. 25 meeting, members voted to sign off on the conditional use approval so Unit 6 at 151 Industrial Rd. can be used for office space. (John Hopkins-Hill/Yukon News file)
Marwell move set for land and building services staff

Conditional use, lease approved for office space

The bus stop at the corner of Industrial and Jasper Road in Whitehorse on Jan. 25. The stop will be moved approximately 80 metres closer to Quartz Road. (Crystal Schick/Yukon News)
UPDATED: Industrial Road bus stop to be relocated

The city has postponed the move indefinitely

The Royal Canadian Mounted Police detachment in Faro photgraphed in 2016. Faro will receive a new RCMP detachment in 2022, replacing the decades-old building currently accommodating officers. (Joel Krahn/Yukon News file)
Faro RCMP tagged for new detachment

Faro will receive a new RCMP detachment in 2022, replacing the decades-old… Continue reading

In a Jan. 18 announcement, the Yukon government said the shingles vaccine is now being publicly funded for Yukoners between age 65 and 70, while the HPV vaccine program has been expanded to all Yukoners up to and including age 26. (1213rf.com)
Changes made to shingles, HPV vaccine programs

Pharmacists in the Yukon can now provide the shingles vaccine and the… Continue reading

Parking attendant Const. Ouellet puts a parking ticket on the windshield of a vehicle in downtown Whitehorse on Dec. 6, 2018. The City of Whitehorse is hoping to write of nearly $300,000 in outstanding fees, bylaw fines and court fees, $20,225 of which is attributed to parking fines issued to non-Yukon license plates. (Crystal Schick/Yukon News file)
City of Whitehorse could write off nearly $300,000

The City of Whitehorse could write off $294,345 in outstanding fees, bylaw… Continue reading

Most Read