If you think living in the suburbs is cheaper than living downtown, think again.

The latest data released by Canada Mortgage and Housing Corporation (CMHC) shows that, in the Greater Toronto Area (GTA), the added costs of commuting usually offset the savings achieved from buying a house in the suburbs surrounding Canada’s biggest city.

Homeowners attracted by cheaper houses with yards in the suburban regions of Greater Toronto make expensive tradeoffs in terms of the time and expense involved in commuting in and out of the downtown core, according to CMHC.

“It’s important that people are looking at the cost of commuting when they’re considering the cost of carrying a home,” said Andrew Scott, a Senior Analyst with CMHC, in a written news release.

Commuting costs impact on household budgets

In its report, entitled “GTA Location and Commuting Choices: The Effect of Commutes on Lower Priced Suburban Housing,” CMHC estimates that suburbanites spend $500 to $800 a month commuting to and from work – a substantial amount that adds to the overall cost of living outside Toronto. Commuting costs range from an average of about $200 a month in the City of Toronto, to more than $800 a month in outlying suburban communities such as Halton Hills, Georgina and Clarington. In the suburbs closest to Toronto, such as Mississauga, Richmond Hill and Pickering, the costs of commuting can be as high as $400 a month.

CMHC said it arrived at its conclusions by analyzing 2016 census data collected by Statistics Canada – looking specifically at housing and commuting costs. CMHC said that its conclusions only involve one person per household commuting daily into Toronto. If two people commute to different locations each day, the monthly costs can exceed $1,000. And the CMHC analysis does not include the cost of parking in Toronto, which can be more than $30 per vehicle a day.

Suburban house prices continue to rise

Add the costs of commuting and a mortgage together, and it’s easy to see that living in the suburbs is not much more affordable than living downtown. Furthermore, housing prices continue to rise in communities outside Toronto such as Oshawa and Pickering as a growing number of people leave the big city for what they think is a better deal in the suburbs. In communities such as Oakville and Markham, larger houses also mean the average house price can be comparable, or even higher, than in downtown Toronto, according to the Toronto Real Estate Board (TREB). And that’s without factoring in the commuting costs.

In fact, according to TREB data for 2018, the average price of a home in the City of Toronto was only $20,000 more than the average price of a home in the surrounding Greater Toronto Area — $762,627 in Toronto vs. $742,237 in the GTA. Online calculators at several banks show the monthly difference in mortgage payments between these amounts to be $100. But add in commuting costs of about $10,000 a year, plus parking, and the financial benefits of living in suburbia quickly evaporate.

A similar study by the Royal Bank of Canada and the Pembina Institute came to the same conclusions about Toronto and commuting. The study, which compared three-bedroom homes in different parts of the GTA found that “car ownership has a significant impact on monthly costs – for each vehicle removed from a household budget, approximately $200,000 more can be carried on a 25-year mortgage.” The study found that for a working couple with jobs in downtown Toronto, it is more affordable to live downtown and walk or bike to work than it is to live in a car-dependent suburban community.

To be fair, the Toronto house prices include condominiums, which tend to be smaller and don’t come with a yard. People who buy a home in the suburbs tend to get more house and a larger footprint that includes a yard than people who live in Toronto proper. When you compare detached and semi-detached houses, people in Toronto tend to pay, on average, $250,000 more than people in suburban communities. Townhouses in downtown Toronto cost, on average, $125,000 more than an equivalent sized property outside the city.

Commuters sacrifice time as well as money

But experts say that dollars and cents shouldn’t be the only measure used to evaluate the impact of commuting from the suburbs into Toronto for work. People considering a move outside the city should also factor in the time commitment – or time loss – involved in a daily commute. The same CMHC study found that people living in the GTA are spending more time each day commuting to work than ever before.

Currently, about 67% of commuters who live in Greater Toronto come into the city by car each day, with the average trip taking 45 minutes one way, or an hour and a half to work and home again. However, for the third of commuters who rely on public transit to get into Toronto, it takes them more than an hour one way – or two hours total – every single day to commute. That can add up to as much as 10 hours a week or 40 hours a month (the equivalent of an additional full week of work) spent commuting to work and back home.

And with people having to move further and further outside Toronto to find cheaper housing, the time spent commuting is only growing, according to CMHC. The number of people who spend an hour or more commuting into Toronto one way rose 16% between 2011 and 2016, data from the housing agency shows.

Do the math before deciding where to live in Greater Toronto

The time spent commuting just might not be worth it. In the suburban community of Burlington, for example, CMHC calculated only a small difference in overall monthly costs when combining mortgage and commuting expenses: $4,216 in Burlington vs. $4,424 in Toronto (a savings of $208) — but with an additional 23 hours a month spent commuting. The bottom line is that you should do the math and factor in the costs of commuting before assuming that living in the Greater Toronto Area is cheaper than living in the city’s downtown core.

What is your experience with commuting in the Greater Toronto Area?

It’s no secret that condos have overtaken Toronto’s cityscape and real estate market. For two decades, the city’s skyline has been dominated by cranes building new condo towers that reflect the growing demand to live within Canada’s most populous city. Historically, most of these towers have been designated for residential use, but that trend is shifting, as many developers are building mixed-use projects that will heavily feature office space that investors and business owners can purchase.

Jim Burtnick is a Certified International Property Specialist and Vice President in charge of sales for Sotheby’s International Realty Canada, and he thinks that city planners are tapping into something really exciting here.

By mandating that condo developers devote a certain portion of their primarily residential condo tower project for office condos (usually this occurs as part of the negotiations related to zoning variances, additional height, etc), what the City is doing is ensuring that these areas where the developments are occurring are not simply “residential zones” that are hollowed out during the work days. Now with office condos and retail aspects too, you get an area that has a 24-hour life cycle.

Welcome to the rise of Toronto’s office condos.

Theory Condos Pivotal for Toronto’s Future

Parallax Development Corporation will be on the forefront of this growing trend with their Theory Condos on College project, which will be built on the southeast corner of College St. and St.George St. Located in Toronto’s exciting Discovery District, Theory Condos will be set amongst amazing public transit and local amenities that will have workers fall in love with their office space.

Theory Condos are only a 5-minute walk away from Queen’s Park subway station, making them accessible from across the entire GTA. This makes it easy for anyone to reach work on time, which is an important factor when attracting the city’s most qualified and sought after employees. If that weren’t enough, workers will also have direct access to the 506 streetcar that travels along College, Carlton, and Gerrard.

These offices also boast a wealth of local amenities that surround the area. In addition to its cafes, bars, and restaurants, Theory Condos are also handy to some of the most recognizable cultural institutions in the city. The Art Gallery of Ontario, Ed Mirvish Theatre, Royal Ontario Museum, and Yonge-Dundas Square are all less than a 20-minute walk away, perfect for after-work plans.

Theory Condos will be a mixed-use development, also featuring residential and commercial retail units. Its 29 storey tower will rise out of a 4 storey podium, and it will feature an impressive list of amenities that include a Fitness Centre equipped with free weights and cardio equipment. Are yoga and pilates more your thing? Then you’ll love the Yoga Studio that faces out toward Toronto’s west end. It will also house an innovative study area with high-speed Wi-Fi. The ground level will have a Starbucks, which is the lifeblood for many young professionals.

The office space prices start at $775 per sq.ft. according to Toronto’s MLS Listing.

Office Condos Are Finally Coming To The Downtown Core

Burtnick is particularly excited about Theory Condos because of its location.

Imagine that you are a tech startup looking for talent. Here you are right next to U of T with all of its constant supply of new, fresh and ambitious talent literally at your doorstep! It doesn’t get better for a recruitment pool and the younger generation do not want to commute between home and work any longer as their parents did. This is the new way of living.

In fact, tech-industry is one of the most significant proponents of building more office condominium developments. A recent report from the CBRE Group shows that Toronto’s growing tech-sector accounts for 20 per cent of pre-leased space in the city. The same report also shows the demand for office condos by revealing a rock bottom 2.7 per cent vacancy rate for the city’s office space.

It’s not just tech companies who see the boon of owning office condos. Prominent real estate developers and investors are putting their weight behind this trend by purchasing office condos. Notable examples are Tricon Capital, who purchased 15,329 square feet of space at 7 St. Thomas Street for $13,315,900, which breaks down to $869 per square foot. The Daniels Corporation also bought 24,686 square feet at 130 Queens Quay for $13,858,737, which breaks down to only $561 per square foot.

The Benefits of Owning an Office Condo

In many ways, the advantages of owning office space mirror the advantages of owning a home. According to Burtnick,

These small businesses are waking up to the fact that they can actually build equity during the lifespan of their business and have an additional asset (besides the business itself) to sell when they depart from the business. That is, instead of paying rent to a major landlord like Brookfield for the next 20, 30, or 40 years, they can build equity by purchasing an office condo plus control their occupancy cost instead of being at the whim of landlord’s and the marketplace when they go to renew their lease. It is a no-brainer!

Essentially, small businesses will be able to count the tangible real estate asset of owning the office condo in addition to their intellectual property and profit earning mechanisms. Another attractive benefit to owning your office condo is that it gives you direct control over your space. When business owners rent their office space, there are plenty of hurdles to overcome. One example is renewing the lease because the business owner is at the whim of the landlord and market values, and they could be forced to pay much more in rent, or even relocate if they can’t afford the increased expense. But if they own the space, the growing market value of the office will increase the business’ value.

Owning an office condo also puts the business owner in control of the layout and aesthetic of the space. Landlords can put rules and limitations on the space, making it difficult to optimize your business and profitability. It can make it difficult to create a design that truly reflects the identity of your brand, which is integral to impressing clients.

It’s not that office tenants aren’t interested in buying their own office space. Senior Vice President at Lennard Commercial Realty Dean Macaskill explains that many people begin their office search by looking for property to buy, but they often end up leasing because locations are too poor, and supply is almost non-existent. There’s also the matter of cost. Freehold office space typically exceeds $1,000 per square foot, whereas office condos cost much less than that. One must also consider the cost of renovations due to the buildings usually being 30 years or older.

This is why Theory Condos and the influx of other mixed-use buildings that feature office condos are so integral to the city’s future.

Investing In Office Condos

Office condominiums are also a great opportunity for real estate investors who want to diversify their portfolio. With long term leases, more dependable payments, and newer markets, investors could significantly improve their holdings by getting involved with office condos. Theory Condos are in good hands because they’re being built by Parallax Development Corporation, who have been building and developing properties in the region since 1981.

They started their operation by focusing on developing retail shopping plazas but expanded their domain to constructing a wide variety of different projects, including front retail, and mid-rise and high-rise residential and mixed-use properties. Through all of this, creating value has been at the core of what they do, so investors and business owners can trust that their investment will see meaningful equitable growth in the future.

Theory Condos on College are just the beginning of what will surely become a persistent trend in Toronto’s real estate market. Burtnick hopes,

the City will continue to encourage office-condos being a portion of new residential towers. We are losing employment land all over this city, and here is a way to provide more, especially for the fastest growing segment of the business economy — self-employed and small businesses.

Like he said before, office condos being the future of Toronto real estate is a no-brainer!

A recent survey by Point2Homes found that while 66 per cent of millennials had an interest in buying a home, half had savings significantly below the national average down payment ($25,000) and 12 per cent didn’t have anything aside. What’s more, 70 per cent of millennials believed that for a down payment they would need less than $50,000 when, in reality, the average down payment is a little over $62,000 in Toronto.

How much do you actually need?

Saving for a down payment is no easy task. For a home that’s $500,000 or less, the down payment must be at least 5 per cent of the purchase price; for a property between $500,000 and $999,999, the down payment must be at least 5 per cent of the first $500,000 ($25,000) plus 10 per cent of the portion of the purchase price over $500,000; and for a property over $1 million, the down payment must be at least 20 per cent of the purchase price.

If you’re self-employed or have a poor credit history, however, a larger down payment may be required. Overall, the bigger the down payment, the better. A bigger down payment decreases the overall debt you have from your mortgage.

Mortgage loan insurance, also known as mortgage default insurance, is something to keep in mind when saving. This insurance protects the mortgage lender in case the borrower is unable to further commit to payments and is mandatory for anyone with less than a 20 per cent down payment. Mortgage loan insurance can be expensive and range between 0.6 per cent and 4.5 per cent of the total mortgage. Where the insurance premium lands depends on the size of your down payment.

While you can get away with a 5 per cent down payment (depending on price), many still opt to save at least 20 per cent to avoid the expensive mortgage default insurance and to reduce the overall debt they’ll have to take on with a new home.

Survey results by Point2Homes

Tips to save for your down payment

If you plan to buy a $400,000 property and want to avoid mortgage default insurance, your downpayment is going to be at least $80,000. Though this seems like an huge number (and it is), it’s not unattainable, especially if you’re planning to buy this home with a significant other. Here are some tips on just how you can save for the down payment.

Taking advantage of financial products — TFSAs, RRSPs, and credit cards

Many financial services can help you save for a down payment, the most obvious being a bank account. Most online banking services allow customers to set up automatic direct deposits into a savings account. So every time a paycheque comes in, your online banking can put away an amount to another account that you’ve committed to not spending. To really boost your savings, commit any pay raises to this savings account and only live off your original salary.

A Tax-Free Savings Account (TFSA) can be the ideal place to store your savings. With a TFSA, any money contributed or earned through the account is tax-free, even when withdrawn. Contributions to this account are ignored on your income tax, and income generated by the TFSA (though stocks, bonds, or funds) is also tax-free.

Canada also has the Home Buyers’ Plan (HBP) to help Canadians with their down payments. The HBP allows you to withdraw up to $25,000 from your Registered Retirement Savings Plan (RRSP) to buy or build a home. This loan has to be repaid within 15 years or else it can result in a massive tax expense. Before using the HBP, you should consider whether you can realistically pay back the amount within 15 years and how taking out this sum will affect your retirement savings goals.

The HBP gave us just the capital we needed to make a 20 per cent down payment on our new condo,

said Sarah Blakes (age 26). She and her fiancé, Arnold Davis (age 27), recently moved into a new condo in the Downtown Core:

Since Arnold and I are far off from retirement, we don’t see borrowing from our RRSP as hurting our future significantly.

One of the most popular banking product is the good ol’ fashion credit card. If you have outstanding credit card debts, it can hinder your ability to borrow more money— i.e., a mortgage. Additionally, when there are numerous credit card interest payments to make every month, it can be hard to save. If this is your situation, the first thing to do is to consolidate your debt. Find the credit card with the lowest interest rate and move your balances from other credit cards to the lowest interest one. Then, pay off the credit card debt as fast as possible to increase your mortgage eligibility and to increase your monthly savings.

25 Scrivener | Toronto Central

Reducing your expenses

Reducing wasteful spending is key to saving, and the first step to this is to create a budget. Every month, examine where most of your money is going to and what can be cut out. Costs like buying lunch can be replaced by meal prepping.

Sarah shares her experience:

Date nights used to always involve dining at nice restaurants downtown. To save for the down payment, Arnold and I opted to buying some nicer ingredients and cooking at home.

There are also other, less common ways to save, as well, such as reducing vacations or selling your car.

Holding back on a trip to Europe or Asia for a year or two won’t kill you and it helps in the long term. Instead, go somewhere cheaper like New York City. You can easily save $500+ just on airfare alone by opting to go south of the border instead of flying overseas. You can even make it a road trip.

One of the biggest expenses you may have is your car. Even if you bought a cheap pre-owned vehicle, simply owning a car costs you expenses in gas, maintenance, insurance, and repairs. If you’re living with your significant other and you both own cars, trying getting rid of at least one car. The sale of the car can provide fresh capital or eliminate expensive monthly car payments that can easily go over $3,000 a year. Depending on the drivers, getting rid of a car insurance can also save $1,000 a year.

Finally, not having to fill the tank or go to a garage can easily result in over $2,500 in annual savings. This amounts to an addition $6,500 of savings per year! Of course, you’ll likely have to supplement this with a TTC pass and a few uber ride, but you’ll likely still come out with extra money in the savings account.

Lastly, the best way to reduce expenses is to not initiate them in the first place. Having a cat or dog can seem fun, but every visit to the veterinarian can cost $300 or possibly more. Then there’s also the amount you’ll have to pay for food, pet toys, and grooming. And renting a place, while saving for a downpayment, can also be an expense you don’t need. This can be renting a place with more space than needed or renting when you could just live with your parents instead.

Getting help from your parents and your in-laws

Help from your parents or in-laws is a popular way to save for a down payment. With real estate prices so high, it’s not uncommon for young, first-time home buyers to ask their parents for either a gift or loan of money. On the flip side, high real estate prices can also mean that parents can more easily borrow against their property to help with their child’s down payment.

Additionally, arranging with your parents to pay a token rent instead of taking on the full cost of Toronto rent prices can help save a lot of money. Even a 200-square foot apartment will cost $1,400 a month. So if you pay a token rent of $500 a month, that means saving $900/month. This was one step Blakes took with her fiancé before buying their condo:

I was fortunate to have parents who let my at-the-time boyfriend and now fiancé and I live with them in Mississauga for a while. Avoiding thousands in monthly rent really helped us save for our condo.

Saving is not easy. Due to the high price of real estate, Torontonians are getting more creative in how they make that downpayment—some even purchasing a property with one or more friends. However, if you can find help from your bank and parents and know where to cut your expenses, you’re already on the right track to becoming a home owner.

A year ago we wrote about New Story Charity and what they’re doing to help families in need and their fight to introduce transparency into existing charity models. They built a crowdfunding platform to construct homes for families in the most vulnerable communities around the world.

In 2017, our team donated 6,500 USD for a home to be built for one of the families in the program. Today we got to see who we’re helping!

Our donation is now being transferred to purchase materials and hire workers to build a home for the Madrigal Sanchez family from Totolapan, Mexico. In September 2017, their house was destroyed after an earthquake of 7.1 magnitude hit the entire state of Morelos, Mexico. Thousands of other homes were destroyed and many people lost their lives and loved ones. Since then, Gabriel and her mother Juana Madrigal Sanchez have been living in temporary housing, but soon they will be getting a new home and a fresh start.

New Story Charity is doing an amazing job, so please consider donating to this great cause. You can donate here and help someone to start writing their new story.

Condominiums continue to be hot sellers in Toronto. While the market for single family homes show signs of cooling, the condo market continues to be relatively strong – particular when it comes to luxury condos. In Toronto, condo units priced between $2 million and $4 million saw a 12% gain in the number of sales in 2018, according to the latest data from the Toronto Real Estate Board (TREB). This means that condos continue to be a good investment – either as a primary residence or rental property.

And the condo market promises to remain red hot in 2019 with a number of new and exciting developments coming online throughout the city. Whether you want to live downtown among the hustle and bustle or further out close to green spaces, there is a new condo development to suit your needs and tastes, as well as your budget. Price ranges for condos vary, making them affordable on any salary. Here are five upcoming developments you should know about:

875 Queen East Condos

Address: 875 Queen Street East
Price: from $700,000
Website: 875queeneast.com

If you’re looking for a trendy downtown condo, then be sure to check out the development at 875 Queen Street. Not only is this seven storey residence situated in the heart of the city, it overlooks vibrant Queen Street East which is always bustling with activity and in the centre of the action. The development features urban, loft-inspired boutique condominiums available with either one or two bedrooms. The sizes of the condos range from 715 square feet to more than 1,100 square feet. And each unit comes with one parking space. Penthouse level suites feature terraces with plenty of space for entertaining. Terraces also come with barbecue gas bibs. Priced in the high $700,000 range.

346 Davenport Road

Address: 346 Davenport Road
Price: over $1 million
Website: www.346davenport.com

For truly high-end luxury, look no further than the condo development at 346 Davenport Road, which opened in January of this year. Located just west of the prestigious Yorkville and of Forest Hill neighbourhoods, this is an elite set of luxury suites. Tennants will enjoy 10-foot high floor to ceiling windows that provide panoramic views of Toronto. Balconies are huge at as much as 3,061 square feet and overlook Yorkville and the Toronto skyline. Two and three bedroom units are available and range from 1,500 – 2,700 square feet of open concept living space. Spa bathrooms are outfitted with natural stone countertops and ceiling mounted rain shower-heads. Note though that this condo development is not for price-conscious consumers. Prices per unit are over $1 million.

7 On The Park Condos

Address: Keele Street and Lawrence Avenue West
Price: $400,000+
Website: 7onthepark.com

Further north in the city is the 7 On The Park Condos, a pre-construction development located at the intersection of Keele Street and Lawrence Avenue West in the North York region. With easy access to transit and only steps from grocery stores, shops and services, including Walmart, this could be an ideal location for a family. Overlooking Amesbury Park, which has 30 acres of greenspace, this development will also have a fully-equipped fitness centre and a multipurpose entertaining facility. Bordering the park is the Amesbury Community Centre and a large sports complex, making 7 on the Park an attractive option for recreation. Two and three bedroom units are available to purchase ranging in size from 672 to 950 square feet. Priced starting in the low $400,000 range.

The Logan Residences

Address: 899 Queen Street East
Price: $500,000+
Website: loganresidence.ca

If high-rises are not your thing, then you may want to consider the low rise luxury condos at the Logan Residences at 899 Queen Street East. Set for occupancy later this year, the Logan Residences is only six storeys high and has just 73 units. The building blends in with the streetscape, which is full of shops and restaurants. Retail space on the ground floor is an added plus. Inside, residents enjoy a gym, meeting rooms and even a dog wash station. There is also 2,000 square feet of outdoor space on the roof that is available to all occupants. One, two and three bedroom units are available in sizes ranging from 611 to 1,161 square feet. Priced in the high $500,000 range.

Avenue 151 Yorkville Condos

Address: 151 Avenue Road
Price: from $800,000
Website: avenue151yorkville.com

For exclusivity, there is the Avenue 151 Yorkville Condos, which are situated in the heart of the luxurious Yorkville neighbourhood and features boutique units. Set at the corner of Avenue and Davenport Roads in the centre of Toronto, this development contains 72 luxury condominium suites with square footage ranging from 651 to 2,666 sq. ft. High-end details in the building include an airy white and glass façade with gold-hued trim and wrap-around terraces. The entrance features a marble lobby with a fireplace and 24-hour concierge service to welcome residents and guests. High-end kitchens add to the glamourous feeling. Priced in the low $800,000 range.

To learn more about these condominium developments, or any other real estate in the Greater Toronto Area, please contact our office. We’re always happy to meet new clients and provide helpful advice.

 Congratulations to our own Jim Burtnick who was the recipient of the BNI Leadership Award on February 20th, 2019. Business Network International has 233,000 members around the World.