The Montreal Metropolitan Community (CMM) has just adopted a first housing policy1which should be welcomed.
The policy is full of good things, including the promotion of intensification. However, the main focus is the development of social and community housing, which has been underfunded for years, and whose consequences (waiting lists, blocked projects, degradation of stocks, etc.) continue to be rightly denounced. by community groups. However, it is Quebec and Ottawa that hold the purse strings, so much so that the policy boils down mainly to steps with Quebec to improve existing programs such as AccèsLogis and the new Quebec Affordable Housing Program (PHAQ). To the credit of the CMM, it can do little more, largely dependent on this plan on the higher governments.
In the absence of adequate public funding, there is a strong temptation to turn to the regulatory route to impose social housing obligations on developers. MWC is no exception. The flagship measure is the Regulation for a mixed metropolis of the City (20/20/20), put forward as a model. Notwithstanding its qualities, it ignores the main determinant of affordability: the supply of housing. Housing construction will remain, in the future as in the past, the prime determinant of affordability. But let’s see in Toronto.
Toronto’s Bad Example
It costs double and even more to find accommodation in Toronto than in Montreal. The result: despite higher incomes, 40% of tenants devote more than 30% of their income to housing. It’s 28% in Montreal, a proportion that we would like to be even lower, but which nevertheless makes Montreal one of the most affordable cities on the continent. Housing unaffordability in Toronto is not due to a lack of social housing; the share (in rental) is higher there: 13% compared to 8% in Montreal. The problem lies in a regulatory regime that imposes heavy fees on developers for a range of services (schools, police…), which translates into higher costs per dwelling and longer approval times. According to CMHC, the City of Toronto has the highest per-square-foot fee of major Canadian cities ($86).
Toronto finds itself trapped in a vicious cycle. Its more onerous regulation favors large developers who have the capacity to support it, hence the lack of plex-type housing. Thus, the Queen City finds itself with a more rigid and unequal offer with the paradox that it needs more social housing to compensate for the lack for which it is primarily responsible.
The lesson for Montreal: social housing, while desirable, is not the primary determinant of affordability. It’s the policies applied to the other 90% that you have to look at.
In the CMM, Montreal imposes the highest fees: $27 per square foot for low-rise rental buildings, compared to $3 in Brossard ($35 and $14 for apartment towers). As in the Greater Toronto Area, barriers to supply often come from the cities. André Dubuc, in his excellent investigation2, reports the many construction sites still on hold, for lack of agreements with the municipality. Greater Montreal is not immune to the “not in my backyard” syndrome and the use of levies and other taxes on construction is spreading, if a recent report is to be believed3.
Make building easier
Will we repeat Toronto’s mistakes? Everything depends on the will of the municipalities of the CMM to actively stimulate residential construction. This is the other step forward that politics is careful not to take, perhaps because of a kind of modesty that prevents it from looking too much at the private side. Yet publicly funded housing will never account for more than a fraction of supply.
There are no two ways to ensure affordability: increase supply by stimulating investment in real estate, and this, at all levels; they are communicating vessels. It was possible to ignore it when the construction was done almost by itself. But the good old days are behind us. Rising interest rates and construction costs, combined with labor shortages, point to more uncertain economic conditions. Housing starts are already going down in Montreal. There is no guarantee that the offer tomorrow will be there.
The statement of the CMM launches good leads: requalification of land; increase in density thresholds; adding accessory units to existing residences… However, a proactive residential construction policy requires more, starting with quantified targets by municipality. The CMM already has a well-designed tool for monitoring, the Greater Montreal Observatory, which could also be mandated to quantify other useful municipal data (royalties, approval times, etc.).
All this will have to be done, of course, with respect for the rights of tenants; this is the reason for the existence of the Administrative Housing Tribunal (TAL). But the TAL has a dual mandate: to protect tenants, in addition to ensuring that real estate remains a good investment. Finally, a new version of the policy should not hesitate to rethink the models of public consultation from a perspective now of “yes in my backyard”4.