The Yukon Housing Corp. is defending plans to spend $13 million subsidizing affordable housing in the territory, despite criticism from landlords and realtors who say the plan will lead to a crash in the Whitehorse housing market.
Michael Hale is vice-president of operations at Yukon Housing.
He says the homes being subsidized will not affect the broader market in Whitehorse
"There is no affordable rental market. There is no affordable rental market to kill,” Hale says.
“The private sector is putting in a majority of the money to put 75 units on the market. Those proponents don't believe it will have that impact on the market or else they would not put their own money up. And this is an area where Yukon Housing can step in, can do something and still let it be private sector driven — not make it social housing because we do not need more social housing: we need affordable housing."
Hale says that in Whitehorse, the competition has been narrowed down to just three developers.
Seventy five rental units have been designated for the city.
Housing officials say the subsidized rental units won't be anything like the housing developments currently under construction. The apartment will be under 55 square metres.
Government will subsidize 40 per cent of construction costs. In return, developers must keep rental rates affordable for at least 10 years.
Kristina Craig, with the Yukon’s Anti-Poverty Coalition, stands behind the housing corp.’s plan.
She says the new rental housing units are for people who cannot afford to buy into the market.
"People who are working at low income jobs or on low income support are spending far more on their housing than is appropriate and ending up going without other things, like food, and spending it on shelter and rent so an affordable housing initiative is needed here."
Landlords and realtors say plan could backfire
But Yukon landlords and realtors are asking the government to re-think the program.
They say the Whitehorse housing market is already over supplied, and predict a crash in the market if the housing corp. follows through with its plan.
Terry Bergen of the Yukon Real Estate Association points to one of the dozens of newly built homes on the Whitehorse market.
"They are good quality construction, good quality finish. They are not luxury homes, they are affordable,” he says, citing a townhouse for $319,000.
It's a dramatic turnaround from just five years ago, when vacancy rates in Whitehorse were near zero, and housing prices soared.
One developer has 60 units planned for the waterfront neighbourhood in Whistle Bend.
Across the pond, dozens of townhouse units are under construction.
Realtors say private investors have more than met the demand.
“Now [the government] is coming along with a huge amount of capital, gift money, to select developers to go into the market and create a whole bunch of units that aren't needed, available at half the price because they are half the cost,” Bergen says.
"The problem is many Yukoners have invested in this real estate market and it's a shell game. They've put out their money and now the government has come along and given a select few their 50 per cent. How does the average mom and pop Yukon investor get out of the market now? They’re trapped."
What happens after 10 years?
Sonny Gray, with the Yukon Residential Landlord Association, says Whitehorse landlords won't be able to compete.
He questions the 10 year commitment from developers, and predict the program will backfire on the people it's meant to help.
“You build them as condos, and you rent them out for now and 10 years from now you condominiumize the whole thing and make a bundle. And you had 40 per cent of the cost given to you by the government,” Gray says.
“And you know what? It's the reset button. All those people who did manage to put in there because they needed affordable housing. Now you put them back on the street because they can't afford your condo."
Housing officials with the Yukon government say they are considering the concerns raised.
They plan to announce results of the competition by mid summer.