A Futile Assault on the Automobile

January 8, 2024

The Ottawa City Council approved a 4-storey, 18-unit residential building on a quarter-acre lot, in the middle of a residential area, without requiring parking. Yes, that is what they did, and I scratched my head, who is going to rent these units with no parking where there are no commercial facilities nearby? Oh yes, there is a bus, I think every half hour, that goes by the proposed development. But unless you are a hermit, happy to read books, and stay home, living without a car in this development will be a challenge.

What further upset me was that our local Councilor voted for the project and said in his newsletter that ‘we need more of this”. Does he not know that cars are part of the Canadian DNA? That cars are an integral part of our cities?

A key element of the official plan for the city is “densification” to permit population growth. Otherwise, the plan claims that “urban sprawl” will result. I guess, the planners never heard of “smart growth” or “planned growth” to alleviate the undesirable effects of urban sprawl (reduction of agricultural land, expensive infrastructure build, loss of wildlife, and pollution by increased car traffic).

A key justification for the approval was its location on a future “major transportation corridor”. The trouble is that the “corridor” has not been funded and the future may be decades away. These projects take decades to materialize while the construction of the building may take a year or two so the units would be rented without parking. Improved public transportation may be years away.

I cannot help thinking that the Council is also “social engineering” by encouraging the use of public transit.

But people have cars: statistics show that every 1000 people own 750 cars in Canada. And a building with 19 units will have at least 19 people living there or more likely, double, or triple that number. That translates into 14 or more cars. Since there is no parking on the major road fronting the proposed development, people renting there with cars will have to park on the side streets. I am sure neighbors will not like that and with the snowfall during the harsh Ottawa winters, it will create headaches for the snowplows. 

Canadians like their cars for the freedom they provide to go anywhere, anytime. Yes, mobility via the automobile does encourage urban sprawl. And yes, there are costs for this freedom (the public costs of infrastructure and private costs for fuel, insurance, etc.). However, Canadians decided that the costs are worth the freedom the car provides to get around (there are thirty million cars in Canada with a population of forty million).

As a result, the ubiquitous use of cars has left a huge imprint on the Canadian landscape. On a recent drive from Ottawa to Collingwood, we traveled on four-lane highways, the 401, and then north on the 400, crowded during the holiday travel season. We slowed down driving through Toronto, on six-lane highways in each direction. We saw a tremendous amount of pavement.

The number of highway construction projects indicates the huge public investments to improve the highway system. As well, governments attracted a fifteen-billion-dollar investment by Stellantis in Windsor and a similar investment by Volkswagen in St. Thomas, both in the EV battery business. Let’s face it, cars are not going away much as the Ottawa City Council would like to pretend.

The long drive allowed me to think that besides highways, the car industry includes innumerable gas stations and repair shops. And one cannot forget the outsized number of jobs the industry provides. Even with Amazon today, the retail industry thrives on huge shopping centers surrounded by mammoth parking lots for cars.

To my way of thinking, to assume that not providing parking will reduce the use of cars is illogical. Ottawa and other Canadian cities rely on cars for transportation. But the Ottawa City Council decided to not require any parking in a 19-unit residential building, rationalizing their decision on the availability of public transit—some system. OCTranspo, the Ottawa public transportation agency decided to cut service and increase fares given the financial losses suffered last year.

Are We Panicking About Housing?

November 27, 2023

Current headline news bombards us with titles like: “housing shortage”, “unaffordable housing”, and “people die on the streets for lack of housing”. These housing-related issues have materialized since 2015; we did not have these topics at that time.

However, all of these headlines spawn questions. For example, what is affordable housing? One metric the Central Mortgage and Housing Corporation (CMHC, the Canadian mortgage insurance company) uses is that no more than forty percent of after-tax family income should be used for housing. But does this metric apply today?

The median family income in Ottawa is just over $100,000 today, and the average house price is slightly over $600,000. The minimum downpayment is five percent for the first half million dollars, ten percent for the next half million, which translates into $35,000 for the average house in Ottawa. So, with this downpayment one needs a mortgage of $565,000 that would cost today circa $4.000 per month. The annual cost, $48,000, would therefore be over forty percent of the annual income of the average Ottawa family income. Which means housing is, in fact, unaffordable, unless one has a larger downpayment to reduce the monthly mortgage payment.

One way to look at housing issues is to identify factors creating demand for, and supply of, housing. Either decreasing demand, increasing the supply of housing, or doing both, would alleviate the current housing problem.

The major factors on the demand side are immigration and the entry of foreign students. Canada let in 430,000 immigrants and 550,000 foreign students in 2022. All of the housing demand can be attributed to these two classes of newcomers to Canada: there are 424 housing units per 1000 people in Canada, so the close to one million newcomers alone needed 400,000 units in 2022 when Canada builds only 250,000 units per annum (Census and CMHC statistics).

While the last two classes of newcomers are beneficial to Canada, they create a huge stress on the housing markets. They are beneficial in that Canadian fertility rates are below replacement rate, hence the rationale for increased immigration. Similarly, Canada is short of skilled construction workers, and therefore welcomes immigrants with such skills. And foreign students pay two or three times the university fees Canadian students pay and therefore contribute to the universities’ bottom line. But we must balance our priorities and perhaps providing housing is more important today than other objectives.

Most of the supply issues can be attributed to the shortage of skilled workers and the lack of land for development. Land is especially a major issue in some of our large cities. Vancouver is surrounded by water and mountains. Toronto’s expansion is limited on one side by water.

Densification has become the key word today to accommodate the increasing population. Densification requires rezoning by municipalities, that takes years. And vacant land development, where available, also takes years for approval.

Are there any solutions? On the demand side, the federal government could reduce the flow of immigration and the intake of foreign students to alleviate demand and pressure on housing. And municipalities could accelerate the approval process to increase the supply of housing.

The two levels of government, working in tandem, could alleviate the housing problem. However, both initiatives would also create negative consequences; Canada needs skilled people and universities favor foreign students. And an acceleration of municipal approvals may weaken environmental reviews and public engagement – both important review elements in the development process and expected by Canadians.  

The bottom line is that increased coordination between the different levels of government would go a long way to streamline the process of welcoming immigrants and foreign students entering Canada by making sure that housing is available.

The danger I see is that a panicky response today encouraging a hugely accelerated house construction program could result in an oversupply of housing in the next few years during which the federal government may change its priorities and reduce targets for immigration and the entry of foreign students.