People living in Canada’s largest city will increasingly need to make a choice between a long commute to work and living in a condo as housing affordability continues to erode.
While there’s no shortage of land in the outskirts of the city, the tradeoff is a car-dependent lifestyle and endless time spent idling traffic jams.
That’s not only irritating for people in their cars, but also unproductive for the economy and bad for the environment, the report says.
“The growing number of homebuyers who live far from where they work, in car-dependent neighbourhoods, results in longer commutes and contributes to traffic congestion and poor air quality. This hampers the region’s economic success and reduces its quality of life,” the report states.
It comes on the heels of another study from Sustainable Prosperity highlighting what it calls the hidden costs of suburban sprawl. That includes costs for a second car – which it pegs at about $10,000 – not to mention the emissions that choke our air.
While about 81 per cent of Canadians live in urban areas, half are in the suburbs, which are growing 160 per cent faster than city centres, the Sustainable Prosperity survey says.
Buyers flock to the burbs for affordability
The RBC report looks at factors that are driving higher home prices including demographics, mortgage rates and housing availability.
It says the average real income in the Greater Toronto Area (GTA) grew 18 per cent over the past three decades (in 2012 dollars), while home prices increased 80 per cent.
The biggest price-to-income ratio increase happened over the past five years, due to population growth and favourable mortgage financing rates.
Mortgage rates have dropped from a peak of 18.5 per cent in 1981 to posted rates of around 4.25 per cent in 2012 (of course rates were much lower for shorter terms). That has given more people the power to purchase a home, driving up demand and prices, the report notes.
The average cost of a home in the GTA increased 11 per cent to $538,708 for the first half of November compared to the same time last year, according to the Toronto Real Estate Board (TREB).
It said the average price of a detached home in the 416-area code, which is the City of Toronto, was $845,883 compared to $595,545 for a similar home in the 905-area code outside the city. A condo in Toronto averaged $395,865 versus $275,664 in the surrounding region.
Those higher detached homes prices are what force more people to move into small dwellings.
"Demand for single-family homes in established GTA neighbourhoods has outstripped supply, which is driving up prices in these areas," said Cherise Burda, Ontario policy director at the Pembina Institute and an advocate for better urban development and public transit that helps to reduce greenhouse gas emissions.
"Many homebuyers are faced with a choice between a condo in a walkable and transit-accessible neighbourhood, or a single-family home located in car-dependent location."
While the findings aren’t a surprise to anyone who has gone house hunting in Toronto in recent years, they will no doubt be championed by Toronto developers who have been criticized for what some describe as an overbuilding of condo dwellings.
In 2012, the RBC-Pembina Home Location Study, found that more than 80 per cent of GTA residents would give up a large home and yard to live in a neighbourhood near public transit and where they could walk to grocery store instead of drive. It found more than 70 per cent of suburbanites in the GTA chose the location of their home based on price, not preference.