TORONTO

Suburbs vs. downtown? Why transportation costs matter when buying a home

CTV Toronto Published Wednesday, January 21, 2015 9:47PM EST

File photo. (Darren Calabrese / THE CANADIAN PRESS)

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Larger properties and a more affordable sticker price are just some of the reasons a homebuyer may choose to settle in the suburbs.

But according to a new study released Wednesday by the Pembina Institute and RBC, living in car-dependent neighbourhoods in the Greater Toronto Area can come at a cost.

In the study titled "Location Matters," researchers show how transportation-related expenses, such as gas and vehicle maintenance, can undermine the lower cost of a home located outside the downtown core.

"We did an earlier study with RBC where we found out that 80 per cent of homebuyers in the GTA would rather live in walkable neighbourhoods that are close to transit, closer to work," said the Pembina Institute's Ontario director Cherisa Burda. "(But) most of these people were being priced out and having to go far afield to find a cheap sticker price on their house. Once they got there, they found out that commutes were really long and their costs were very high in terms of transportation."

In the study, researchers used data from four prospective homebuyers, factoring the costs associated with living in five different suburban and downtown locations.

Here's a look at one test case:

"Derek and crew"

In this test case, Derek and his family have a budget of under $900,000. They are looking for a four-bedroom, detached home, with two parking spots and a finished basement:

Location: Danforth Village

Home price: $689,100

Monthly housing expenses before transportation costs vs. after transportation costs: $4,070 vs. $5,961

Commuting time/month: 45 hours

Walk score: 80

Location: Roncesvalles

Home price: $932,500

Monthly expenses before transportation costs vs. after: $5,537 vs. $7,287

Commuting time/month: 33 hours

Walk score: 88

Location: Oakville

Home price: $881,800