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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

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