CMHC study made several assumptions, leading to opposite conclusion
Canadian census data shows that most of the recent population growth in metropolitan areas has taken place in the suburbs.
Relative to the urban core, housing is less expensive in the suburbs. But does the savings get eaten up by increased commuting costs?
That was one of the findings of a recent study by the Canada Mortgage Housing Corporation (CMHC), which claimed that — at least in the Greater Toronto Area (GTA) — “the cost of longer commutes can completely offset the savings from moving to more affordable municipalities.”
While the CMHC study alerted households to the hidden costs of suburbanization, Canadian census data nevertheless reveal that most of the recent population growth in metropolitan areas has taken place in the suburbs.
But why are Canadiana moving to the suburbs en masse, if affordability gains are not necessarily as advertised?
The answer lies in the assumptions that drive the conclusions in the CMHC study, among them that dwelling units and household sizes are the same across the urban landscape.
Furthermore, the study estimates commuting costs using median distances and does not factor travel times directly into the calculation. It further estimates suburban transit trip costs by regional train service (in this case, Go Transit) “for each municipality as the monthly fare (40 one-way trips) to commute to Union Station” in downtown Toronto.
Challenging these assumptions reveals that the suburban savings remain intact.
First and foremost is the fact that dwelling units differ in sizes. According to the 2016 Census, the average number of rooms in a dwelling in the City of Toronto was five. In the neighbouring suburb of Vaughan, the average number of rooms was 7.2.
Not only is the size of low-rise housing itself larger in the suburbs, but the lot sizes tend to be much larger, too, because of the lower land prices.
It is only by ignoring the huge difference in dwelling sizes that the mortgage carrying costs of smaller-size detached units in the City of Toronto can be equated to their much larger counterparts in the suburbs.
Suburbs have larger homes because they shelter larger families. The average household size is 33 per cent larger in Markham and 25 per cent higher in Mississauga than the average household size in the City of Toronto.
The smaller-size households, i.e. singles and couples without children need much less space than larger-size families and therefore, on a per-square-foot basis, smaller households outbid larger-size households for housing in the urban core.
Another unstated assumption in the CMHC study is about the false choice between the suburbs and the central city for larger-size households. The urban core offers fewer affordable choices for larger families. Even if the commuting costs were higher, which we will show is not necessarily the case, large families do not have a real choice between the suburbs and the core.
The CMHC study also bases its commuting costs on median distances. This favours the urban areas for two reasons. First, for the 12 per cent who walk or bike to work, the study assumes zero commuting costs. Second, since the study estimates costs based on distance and not time, it underestimates the duration of short-distance commutes in the congested urban core. Thus, the monthly commuting cost for the City of Toronto is estimated at a mere $115, even less than the cost of a monthly transit pass. In comparison, workers living in Georgina, 80 kilometres north of the city, are estimated to incur a cost of $1,079 for driving to work.
The number of suburban workers who commute to the central core is small in the GTA
Almost 44 per cent of those who live and work in the City of Toronto commute by public transit and another 40 per cent commute by car on a very congested road network. At the same time, transit-based commutes on average are much longer in duration than those by automobile. By estimating commuting costs as a function of distance and not time unduly favours Toronto in this comparison.
The number of suburban workers who commute to the central core is small in the GTA. In Georgina’s case, that number is 2,655. As for Oshawa, a suburb with an abundance of affordable low-rise housing, only 10,750 residents commute (largely by regional train service) to the City of Toronto.
While some suburban residents incur longer commutes, many more don’t. The suburban commuting advantage is obvious when one considers commutes of fewer than 15 minutes’ duration. Only 13 per cent of Toronto residents enjoyed commutes shorter than 15 minutes’ duration. In suburban Oshawa, 28 per cent of commutes were less than 15 minutes long.
After stripping away the assumptions, the locational advantage of suburbs is obvious: cheaper housing with sufficient shelter space for families and commutes comparable to those of central city dwellers. No wonder most of the population growth in Canada’s metropolitan areas was realized in the suburbs between 2006 and 2016.
Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.