Montreal Economic Institute Research Papers 7i`iÊ Ý ÕÃ}Ê>`Ê/À>ëÀÌ>ÌÊÊÌÀi> ÜÊÃÕLÕÀL>â>ÌÊÃÊ«ÀÛ}ÊÌ iÊÀi}½ÃÊV«iÌÌÛiiÃà ÕÞÊÓääÈ - ÊÓÓÓÈnǣǣ Wendell Cox Housing and Transportation in Montreal How suburbanization is improving the region’s competitiveness Montreal Economic Institute Research Paper • July 2006 Chairman of the Board: Adrien D. Pouliot Acting President : Tasha Kheiriddin The Montreal Economic Institute (MEI) is an independent, non-profit, non- 6708 Saint-Hubert Street partisan research and educational institute. It endeavours to promote an Montreal, Quebec economic approach to the study of public policy issues. Canada H2S 2M6 The MEI is the product of a collaborative effort between entrepreneurs, Telephone: (514) 273-0969 academics and economists. The Institute does not accept any public Fax: (514) 273-2581 funding. Web site: www. iedm.org The MEI is a registered charity as defined by the applicable federal and provincial statutes. Therefore, it issues receipts for income tax purposes. One-year subscription to the MEI publications : $98.00. The opinions expressed in this study do not necessarily represent those of the Montreal Economic Institute or of the members of its board of directors. The publication of this study in no way implies that the Montreal Economic Institute or the members of its board of directors are in favour of or oppose the passage of any bill. Production supervision: MB Conseil Cover, cover photos, design and typesetting: Guy Verville © 2006 Montreal Economic Institute ISBN 2-922687-17-1 Legal deposit: 2th quarter 2006 Bibliothèque et Archives nationales du Québec Library and Archives Canada Printed in Canada Housing and Transportation in Montreal Table of contents Executive Summary ................................................................................................................................ 5 INTRODUCTION .......................................................................................................................................... 7 1. Suburbanization and its critics .................................................................................................. 9 The case for competitiveness .................................................................................................... 9 Fighting “urban sprawl” ............................................................................................................... 11 Greenhouse gas emissions ........................................................................................................ 12 Jobs-housing balance ................................................................................................................. 13 Substituting automobile use with transit ................................................................................. 13 Building roadways: pent up demand, not induced demand .................................................. 14 What if there had been no suburbanization? .......................................................................... 14 2. HOME OWNERSHIP AND HOUSING AFFORDABILITY ......................................................................... 16 Housing affordability trends and policies ................................................................................ 16 Housing affordability in Montreal .............................................................................................. 17 Competitiveness in housing affordability: prospects for Montreal ...................................... 19 3. MOBILITY AND TRANSPORT ................................................................................................................. 20 Traffic congestion and land rationing ....................................................................................... 20 Mobility in Montreal ..................................................................................................................... 21 Mobility trends and policies ....................................................................................................... 24 River crossings ............................................................................................................................. 25 Planning for competitiveness .................................................................................................... 25 CONCLUSION .............................................................................................................................................. 26 Appendix Market codes used in Figures 11, 12, 17 & 18 .............................................................................. 27 BIOGRAPHY ................................................................................................................................................ 28 3 Montreal Economic Institute Wendell Cox Housing and Transportation in Montreal How suburbanization is improving the region’s competitiveness Executive Summary Montreal Economic Institute Research Papers ontreal is not generally considered 7i`iÊ Ý simply because automobile competi- Mone of the world’s most competi- tive transit is not available for most tive urban areas. For example, a recent trips, and cannot be provided at a price report by the Organization for Economic ÕÃ}Ê>`Ê/À>ëÀÌ>ÌÊÊÌÀi> that can be afforded by society. Cooperation and Development (OECD) ÜÊÃÕLÕÀL>â>ÌÊÃÊ«ÀÛ}ÊÌ iÊÀi}½ÃÊV«iÌÌÛiiÃà One of Montreal’s emerging ranked Montreal 44th in gross domestic advantages is in housing afford- product per capita out of 65 interna- ability. The factor used to measure tional metropolitan regions. However, ÕÞÊÓääÈ housing affordability is the “median this could be changing. Superior trans- multiple,” which is the median house port infrastructure- ÊÓÓÓÈnǣǣand its land use poli- price divided by the median house- cies are giving Montreal a new advan- hold income. The median multiple in tage over competitors that have taken Montreal is estimated at 3.5. This is “wrong turns.” below Toronto’s 4.4 median multiple and well below There is a strong relationship between subur- Vancouver’s 6.6, demonstrating Montreal’s generally banization (pejoratively called “urban sprawl”), auto- more affordable housing. mobile use and the strong economic growth that has Historically, median multiples have tended occurred in high-income nations since World War II. to be 3.0 or below, and remain so in Quebec City, Millions of Canadian households were able to stop Edmonton, Winnipeg and many US markets. In renting and begin accumulating their own equity many other markets, however, housing affordability as a result of the lower cost houses built on the less has deteriorated markedly in recent years. The expensive land on and beyond the urban fringe. They highest median multiples are above 10 (Los Angeles, were able to take advantage of a much larger array San Diego and Honolulu). The metropolitan areas of employment and shopping opportunities because with significant constraints on land have experienced they could get anywhere in the metropolitan region a median multiple increase five times that of those in a comparatively short period of time, rather than without such policies from 1995 to 2005. the limited destinations that could be reached quickly This huge divergence in the price of housing on transit. In short, a world or a Montreal without relative to incomes cannot be explained by national cars or suburbs would be far less affluent. market or demographic factors. Without excep- Nonetheless, a strong lobby has arisen to oppose tion, the markets with the highest median multiples both suburbanization and the automobile. Much of have land shortages, virtually all of which stem from its critique is simply wrong. Suburbanization is no public policies. In most cases, land scarcity is created threat to agriculture; in fact, the geographic spread of by anti-suburban policies, which limit the availability urban areas is only a fraction of the farmland removed of land for development. This increases the price of from use because of improving productivity. The land, which is reflected in higher house prices rela- lower densities of the suburbs do not increase traffic tive to incomes. congestion or air pollution, they dilute it. There is no The Montreal area has not adopted the anti- prospect for urban planning to create an improved suburban policies that have contributed so much to “jobs-housing balance” in which travel distances are destroying housing affordability in many metropol- minimized because proximity to employment is not itan areas. In contrast, Montreal’s principal compet- a principal reason people use in choosing their neigh- itor, Toronto, is implementing some of the most borhoods. There is virtually no hope of transferring radical land rationing policies and it seems likely material amounts of automobile demand to transit, that its median multiple will go much higher in the July 2006 Housing and Transportation in Montreal future. There are already early indications that the including an expressway bypass of Montreal Island most unaffordable housing markets in the United through the South Shore. These improvements are States are experiencing significant domestic migra- likely to extend Montreal’s competitiveness as other tion losses to areas that are more affordable. All of this urban areas implement dead-end policies that can makes Montreal more attractive both for businesses only make the transportation situation worse. and households wishing to own their own homes. Transit is also important, principally