There’s no refuge in the suburbs from Canada’s housing affordability problem.
You can buy a home for less money in the suburbs than you can in a big city, but the cost of commuting may kill almost all your savings. Some number-crunching by a public-spirited mortgage broker David Hughes in the Toronto area makes this point quite clearly.
Mr. Hughes uses some contentious assumptions, but his spreadsheet is a great conversation starter and a must-read for home buyers who are searching for affordability in the suburbs.
Read the full story.
Living in the suburbs
| Home purchase price | $500,000 |
| Downpayment | $50,000 |
| Mortgage principal (includes 2% CMHC fee) | $459,000 |
| Auto costs annually | $19,000 |
| 25 years of automobile costs | $475,000 |
| Monthly mortgage payment 25 years at 3.5% | $2,291 |
| Monthly automobile expenditures | $1,583 |
| Mortgage plus automobiles, monthly | $3,874 |
| Post-mortgage car costs: 15 years of 1 car | $142,500 |
| Total paid for home (interest and principal) | $687,495 |
| Total paid for cars | $687,495 |
| Total paid to live and get around for 40 years | $1,304,995 |
Living in the city
| Home purchase price | $720,000 |
| Downpayment | $50,000 |
| Mortgage principal (includes 2% CMHC fee) | $688,425 |
| Auto costs annually | $6,000 |
| 25 years of automobile costs | $150,000 |
| Monthly mortgage payment 25 years at 3.5% | $3,437 |
| Monthly automobile expenditures | $500 |
| Mortgage plus automobiles, monthly | $3,937 |
| Post-mortgage car costs: 15 years of 1 car | $90,000 |
| Total paid for home (interest and principal) | $1,031,130 |
| Total paid for cars | $240,000 |
| Total paid to live and get around for 40 years | $1,271,130 |
Assumptions
- Car costs estimated at $9,500 per year for a compact car using CAA numbers times two vehicles
- Downtown transportation costs pegged at $235.50 for 2 adult transit passes per month plus discretionary transit spending of $264.50 per month
- Mortgage is paid over 25 years at a constant rate of 3.5 per cent
SOURCE: DAVID HUGHES
GRAPHIC BY STUART A. THOMPSON AND JOHN SOPINSKI