Downtown vs. suburbs: which costs more?

High housing prices tend to decrease further from downtown — enough that a house in the suburbs can cost significantly less than a similar one in the downtown core. But a new report that factors commuting costs into house prices finds the total costs aren't that different.

Report argues commute times should be accounted for in home-buying decisions

Cheaper housing is one of the benefits of living in the suburbs. But time and money spent to jobs in the city represent an added burden many home-buyers overlook. (IDuke)

High housing prices tend to decrease further from downtown — enough that a house in the suburbs can cost significantly less than a similar one in the downtown core. But a new report that factors commuting costs into house prices finds the total costs aren't that different.

The report, co-produced by RBC and think tank the Pembina Institute, concludes it might actually be better, financially, living closer to where you work.

The report used four different home buyers as test cases.

Derek Durham is one of the subjects. He had a house-buying budget of $800,000. He and his wife moved to Brampton after their third child was born.

"We kind of got the biggest bang for our buck out here," Durham told CBC News. 

But Durham works in North York and his wife works downtown. They call the commute from Brampton long and painful.

"Sometimes a home-buying dream turns into a commuting nightmare," said Cherise Burda, who conducted the research for the Pembina Institute.

She found five housing options for each test case family, all in different areas. Some had the option of one adult walking or taking transit to work.

"Those savings were quite significant," she said. "Getting rid of one vehicle can save a family a minimum of $200,000 over the lifetime of a mortgage."

Durham and his wife plan to put an offer on a home in Etobicoke. "It's a good area and good schools," he reasoned.

It's smaller than their current house and it costs more. They'll keep their two cars, but Durham figures he'll spend an hour less per day inside his car. His wife will shave half an hour off her total commute.

Read the full report below.

With files from Lorenda Reddekopp

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