A new report from the Canada Mortgage and Housing Corporation finds that the savings from buying a lower priced house in the suburbs of Toronto may be offset by commuting costs.
It’s already been reported by Sotheby’s International Realty Canada that the preferred housing type among Canadians is the detached home, and according to CMHC’s findings, people are willing to commute greater distances to work in order to have more living space in such a home.
As of 2016, there were 2.6 million commuters in the Greater Toronto Area, and 1.3 million of them commuted to Toronto. Two-thirds of those commuting to Toronto already lived in the city, while the other third commuted from 905 areas. Just under half of the commuters travelled by car and 40% took transit. Of those taking public transit from the 905 areas, 56% took the train.
From 2011 to 2016, the amount of people commuting one-way for 60 minutes or more increased 16%, while those travelling one-way for 45 to 59 minutes increased 14%. The people commuting for more than one hour one-way into Toronto lived mostly in Aurora, Burlington, Milton, Newmarket, Oakville, and Oshawa.
Unsurprisingly, CMHC found that the price of detached homes decreased the further away from Toronto they were located. Of course, the further away the homes are from Toronto, the higher the commuting costs.
According to CMHC’s map of monthly commuting costs, the costs can range anywhere from less than $200 to more than $800, based on a single commuter in the household. To spend less than $200 a month commuting, you have to be living in Toronto already. If you live in Clarington, Georgina, or Halton Hills, there’s a pretty good chance you’re paying $800 or more a month to commute to Toronto.
CMHC calculated that the average monthly mortgage and commuting cost in Toronto was just over $4,000 (based on 2016 data). That means, if you live in East Gwillimbury, Uxbridge, Burlington, Caledon, Newmarket or Mississauga, whatever you saved on the price of your home is being offset by commuting costs. And remember, that’s with one household commuter. If you have two and your costs are doubled, it would be more affordable (based on these two factors) on a monthly basis to live in Toronto.
In Aurora, Oakville, Vaughan, Markham, and Richmond Hill, the mortgage alone is more expensive than the mortgage and commuting costs in Toronto. But, if you’re living in these areas, it’s probably not because you’re looking for a more affordable home - you just value more space and the suburban lifestyle.
There are many areas of the GTA that come under the total monthly cost of living and commuting in Toronto, but as soon as you add a second commuter, or even a third, the savings are offset. It looks like the only areas that would still be more affordable even with more than one commuter are Oshawa, Clarington, Brampton, and Ajax. The rest are cutting it pretty close.
Then you have to take time into consideration. CMHC does calculate potential value of time based on average hourly wage, but we feel this is too subjective. Everyone values their time differently. Some people like sitting on the train or in their car for an hour so they can catch up on their podcasts.
It’s important to remember that living preferences are completely subjective - many of the families living in the suburbs live there because they want to, not just because they can’t afford a detached home in Toronto. But, this is valuable data for those who are looking outside of Toronto just because of lower price points on detached homes.