Photo: James Paolo/Flickr
While the sticker price of homes in the outer suburbs of Toronto may be easier to swallow, a new report from the Pembina Institute and Royal Bank of Canada (RBC) suggests that it may make more financial sense to live closer to work, even if that means upping your homebuying budget.
GTA homebuyers have admitted in 2012 and 2014 surveys by RBC and Pembina that they’d prefer a walkable neighbourhood, close to work and accessible by rapid transit, even if it meant living in a smaller home. Yet 82 per cent admitted that price ultimately trumped preference when it came down to choosing where to live.
“Most homebuyers acknowledge that choosing a cheaper home often means spending more time and money commuting. But when we actually crunch the numbers, these costs can be startling,” said Cherise Burda, Ontario Director of the Pembina Institute.
The report calculated multiple variables including closing costs on a home sale, property taxes, fuel costs and transit fares as well as factors such as the cost of lost time, and neighbourhood Walk Score.
The result? The report doesn’t advocate for a family of four to squeeze into a two-bedroom downtown condo. Aware of the needs and wants of four very different home hunters, the report’s case studies found some surprising conclusions when it comes to savings and spending.
One of the studies focused on Priya, a move-up buyer with a family of four in need of more space and a budget between $400,000 and $550,000. She works in Mississauga while her husband works in downtown Toronto.
Although the cost of a home in Milton was technically $180,000 lower than one in Port Credit, after counting housing and transportation costs and other considerations, the cost of the living further out in the ‘burbs was roughly $1,000 higher per month than the Port Credit home. If Priya’s husband took the GO train to work, that would eliminate the need for two cars, cut down costs considerably, and allow them to still live in a detached house with three bedrooms.
Focusing on multiple trade-offs and not just the “for sale” price of home in the GTA, the report found time and time again that the less expensive homes located farther from the workplace ending up costing more once transportation and commuting expenses were calculated.
To read the complete studies, which run the gamut from diehard downtowners to families of five who prefer the suburbs, check out the full report. RBC and Pembina also created an interactive tool that allows you to look closer at all the costs of the individual case studies.