Traditionally most buyers believe that they can save their money by opting to purchase a home in the suburbs rather than paying a higher price for a home downtown. And, in some cases, this may be true. Houses downtown are typically more expensive than a similar home in a suburban neighbourhood, sometimes by hundreds of thousands of dollars.
A major drawback to living outside the city, however, can be the daily commute to and from work. Many homeowners still work downtown, and in most dual-income families this means two cars on the road every day. When determining the long-term costs of your mortgage it is important to consider the monthly and annual costs you’ll be spending on auto expenses if you will be relying on a car to perform most daily errands.
In an article from the Globe and Mail, David Hughes of Mortgage Group Ontario Inc. recently analyzed the costs of buying in the suburbs versus buying downtown. Though the numbers he used are based on assumptions, the results should persuade buyers to acknowledge their auto expenses when planning a home purchase. Hughes imagined that downtown buyers would take public transit and use car-sharing or rental services periodically throughout the year, for an annual cost of $6,000, while suburban homeowners with two Honda Civics would spend approximately $9,500 per vehicle.
Of course there are several factors that could alter these assumptions, including the type of car that you drive or whether you’re able to walk to and from the office, which might save you from buying a transit pass. If public transit gives you anxiety, then you may think that the cost of your commute is worth the money. Some buyers would rather pay a little bit more on gas and car maintenance to have a large, private yard to enjoy with their family. Other buyers might prefer a higher mortgage payment if it means they’re able to raise their children in an urban environment where they can walk to schools, libraries, and parks. These personal preferences can often outweigh the importance of commuting costs.
Based on his numbers, Hughes found that after 40 years, the family who purchased a house for $720,000 downtown had actually spent a little bit less than the family who bought a $500,000 home outside the city, when combined with the cost to get around. Living in the suburbs totalled $1,304,995, while living in the city came to $1,271,230, a difference of $33,865. What matters most is that, regardless of where you plan to buy, you incorporate a detailed budget into your housing affordability analysis, and that you remember to plan for the years ahead. For full details on David Hughes’ analysis, please visit the full article.
For more information on Ottawa’s many neighbourhood options for buyers, please contact us at any of our branch locations or browse our website for a sales representative who can help you. Thinking of moving? You can also view our hundreds of active listings, or request a free market evaluation of your home.
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