No Yellowknife realtor worth his commission would fail to point out to a prospective buyer that even in a city where house prices are wildly inflated, they’ll still stay ahead of the game by signing up for home ownership.
If house prices are silly up here, rents are even more so. Landlords bend tenants over every month for as much as $1550 for a one-bedroom apartment and $1790 for two bedrooms, compared to $875 to $1100 in Edmonton.
The rationale for such rates is that Yellowknife wages are higher. That is supposed to make the pain bearable, but the advantage is not that great. The territory’s median family income of $109,670 led the country in 2013 – just $10,000 ahead of second-place Alberta.
The burden falls most heavily on single men and women. Unless they can find a compatible roomie, the Yellowknife ‘advantage’ is rapidly eaten up by the rising cost of everything from food and fuel to rent or mortgage payments.
Add Yellowknife’s lack of cultural amenities and post-secondary education to the cost of escaping the city’s interminable winter for a few weeks, and you have a formula for transience that almost overwhelms the territory’s enthusiastic birth rate.
A two-horse, no-crash town
There is another, even more significant factor: since the post-gold mine slump in the late ’90s, Yellowknife has not gone through the financial crashes that have wracked older and larger cities, and are now forcing landlords from Fort McMurray to Calgary to trim rents in every category.
As well, Yellowknife is a two-horse town. As Arctic Outback CEO Emil Fung put it succinctly: it’s an old mining town. The addition of politicians and bureaucrats provides stability, but without a viable third leg, the city’s economy is destined for stagnation.
Earlier this year, the city’s vacancy rate was closing in on 12 percent. NWT Housing Corp. cut a deal with Northern Properties REIT to fill empty apartments with social housing clients, and the vacancy rate was knocked back to five percent.
A vacancy rate of five percent or less tends to goad renters into home ownership. Developers have found a ready market for housing priced below $400,000, but the shift is too subtle to upset the status quo.
Rent controls could re-balance the equation, but only for a few tenants, and only if government took on the job or partnered with private developers.
The City would likely be on its own in such a venture. Though this election season is seeing promises of cash funneled towards housing initiatives from the parties, for the large part, the federal government has retreated from social housing, and for the territorial government, the need in small communities is far more pressing than Yellowknife, where price, rather than availability, is the issue. The likelihood is that Yellowknifers will be stuck with silly-season, sky-high rents — until the local economy implodes.