When people complain about the big jump in the cost of housing in Canada’s major cities, a common response is, “well, Toronto (or Vancouver or Montreal) is becoming a world class city, and world class cities are expensive.”
True, world class cities are expensive. But what’s also true is that those world class cities to which we like to compare our Canadian cities also have affordable suburban areas.
They call it “drive (or ride) till you qualify”: You leave the city and keep going until you get to a suburban neighbourhood you can afford. You can do this in New York, London, Rome, Shanghai or Tokyo. You can’t really do it in Toronto or Vancouver anymore.
Watch: The best places to buy a house in Canada in 2019, according to MoneySense. Story continues below.
In an analysis carried out earlier this year, Finder.com concluded Canadian cities have some of the smallest discounts for moving out to the suburbs. In Toronto, the price of residential real estate in the ’burbs is just 20 per cent cheaper than in the inner city, while Vancouverites can save 24 per cent.
Compare that to New York, where you get a 55-per-cent discount moving to the suburbs, or London, where it’s 45 per cent. (The global average is 41 per cent.)
“Torontonians might be better off living in the city after all,” Finder.com concluded in its analysis.
This explains why, despite those cities’ reputations for being very expensive, you can buy a five-bedroom house in the New York suburb of Massapequa for the equivalent of C$344,000 or a cramped townhouse in London’s east end for C$421,000.
Compare that to Toronto’s 905 suburban region, where the average price of all property types clocked in at $770,065 in May, or 40 per cent higher than the average price in New York’s Suffolk County ($545,000 in Canadian dollar terms) The average price of a house in Staten Island, a ferry ride away from Manhattan, is $70,000 less than the 905.
This matters, because affordable suburbs are one of the things that make world class cities’ expensive inner cities sustainable. Manhattan is super pricey and employs many low-income service industry workers, but they can find affordable housing on the peripheries.
It’s this relatively high cost of the suburbs that suggests the high house prices in Toronto and Vancouver may not be sustainable in the long run. Without affordable homes nearby, the exodus of millennials from Toronto and Vancouver might just be beginning.
But there is an upshot to all this: Because there isn’t much reward for moving to the suburbs, Canada is doing less than others to encourage the car-dependent, energy-heavy suburban lifestyle.
If a larger share of our population bikes or walks to work, we may have to make fewer painful decisions to meet our carbon emissions commitments. And if a larger share of the population lives in high density areas, it will be easier to justify the cost of building transit.
So maybe pricey suburbs aren’t really a bad idea, after all?