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Yukonomist: A bold idea from New Zealand for our housing supply

At the debate during last month’s municipal election in Whitehorse, a number of candidates suggested big changes for the city’s Official Community Plan.

At the debate during last month’s municipal election in Whitehorse, a number of candidates suggested big changes for the city’s Official Community Plan.

Last week’s figures from the Yukon Statistics Bureau highlight why people feel something needs to be done about the supply of housing. With demand surging and supply struggling to catch up, the average price for a single detached house in Whitehorse hit another record at $657,000. That’s up a stonking $182,000 or 38 per cent since Fall 2018, when the last mayor and city council were elected.

Whitehorse housing policy reformers aren’t alone in feeling a need to shake things up. Around the world, the unstoppable force of the housing crisis has been crashing into the immovable object of supply, shored up by restrictive zoning rules, not-in-my-backyard lobbying and homeowner-dominated city councils.

And, after years of stasis, there are some surprising signs of movement. New Zealand grabbed the global headlines with a bold move, backed by both Prime Minister Jacinda Adern and the main opposition party, to free landowners from local building restrictions.

The reforms are complicated, but the New Zealand Herald says the upshot is that local municipalities will no longer be able to block property owners from densifying single-family lots. If you own a single family lot in a major city such as Auckland, Wellington or Christchurch, you will be able to build up to three homes of up to three storeys on up to 50 percent of the property without the need for an okay from your local government.

Meanwhile, in California, Governor Newsom recently signed a suite of over 30 housing bills including a New Zealand-style override of single-family-only zoning. Municipalities will no longer be able to stop property owners from densifying. If lots meet conditions, duplexes or even quadplexes could be built. Meanwhile, another new law makes it easier and faster to get approval to build apartment buildings of up to 10 units.

Adding thousands of housing units to the supply over coming years will not just help those struggling to afford housing in New Zealand and California. It will also help the economy. Many economists believe housing restrictions are one of the biggest inhibitors of economic growth.

The Economist magazine points out that “zoning laws and conservation rules have proliferated since the 1960s,” adding that during the following decades the rate of house building relative to population fell by half in rich countries (such as Canada). By forcing people to leave highly productive cities or commute long distances, tight housing supply can choke off economic growth. Economists have estimated that if the three biggest cities in the United States liberalized planning rules then the country’s economy would be four percent bigger.

That may not sound like much, but it represents billions and billions in income and tax revenues. Talk to almost any businessperson in Whitehorse, and they’ll tell you how soaring housing prices make it more difficult to find staff and more expensive to hire them. Who knows how many businesses could be bigger or how many workers would be living in Whitehorse if house prices didn’t set new records every time the Yukon Statistics Bureau puts out a report.

Politics is often analyzed as a left-versus-right affair. But housing is more of an insider-versus-outsider battle. The fault lines are between people who are already in the property-owning system, and those who are outside it. Homeowners tend to be well represented on city councils across the land, and also well organized when it comes time to protest multi-family homes or apartment building zoning in their neighbourhood.

Renters, immigrants and young people tend to have less clout at your typical city council.

Of course, if both right- and left-leaning city council members can be in favour of restrictive zoning, then right- and left-leaning senior governments can take the side of the outsiders.

This is how you get both liberal and conservative politicians in New Zealand supporting the new policy. It has taken some political courage to stand up for the outsiders in the face of well-organized protests from local property owners and municipal governments.

Here in Whitehorse, the newly elected mayor and city council have a chance to show immediate leadership to improve the supply situation.

However, the territorial government also needs to mobilize itself in case we end up with the same nice speeches, long consultation periods and limited action as we saw over the last council’s term.

The joint Liberal-NDP rent control law was an example of political collaboration, even if its effect is more likely to encourage landlords to sell their rent-capped units into the rising market than expand the rental supply.

What if you had a joint NDP-Liberal-Yukon Party ultimatum to the City of Whitehorse to come up with a meaningful housing-supply plan fast, or they would get a copy of the New Zealand law, replace “Auckland” with “Whitehorse”, and pass it?

It would be even better if the territorial government matched this with an accelerated roll-out of lots from its own holdings. Macaulay Lodge, for example, closed way back in February 2019. When do Yukoners get to bid on re-developing the site for affordable housing?

Like announcing climate emergencies and then moving at non-emergency speed, repeated political claims to be doing something about the housing crisis are undermining public confidence in our governments. If New Zealand and California can do something bold, so can we. If we choose to.

Follow up - since last week’s column on Crunchy Conundrum’s for Yukon Cereal Bowls, two more milk substitutes with lower-carbon ingredients but longer shipping distances have been sloshed over my muesli. One is “Miylk”, made from chickpeas and flaxseed by YoFiit in Ontario. The other is “Milkadamia” with macadamia nuts by Jindilli Beverages of Illinois. While the latter is not a source of protein, lovers of archaic words will enjoy starting their day with its snappy commercial tagline: “Moo is moot.”

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.