Downtown Condo vs. Suburban Townhouse; Think You Know What’s Cheaper?

It’s a rite of passage for young professionals- student loans are dwindling, careers are taking off, and many begin to dream of owning their first home. Most folks work downtown in urban centres, but being within walking distance of the office means a much higher baseline price for starter homes. A condo downtown seems like a good compromise, but the monthly condo fees scare away a lot of buyers. As a result, lots of families turn to the suburbs for their first home, seeing it as the only way to make the leap from renting to owning. But have you ever actually sat down and crunched the numbers?

Let’s imagine two couples- John and Jamie, an architect and high-school teacher, who purchase a $350 000 condo in the Centretown neighbourhood. Our comparison couple is Michelle and Brad; she a federal public servant and he, a police officer. They choose a townhouse of the same value, in a new development in Orleans.

The most obvious cost differential between the condo and the home in the ‘burbs is the added burden of commuting to work. Public transit will cost over $100 a month in Ottawa (more depending on whether your location requires an Express transit pass,) and driving a small car downtown five days a week will cost about $420 a month- not including the purchase price of the car! Since Brad is on patrol, shiftwork makes it impossible to take the bus to work. The couple is then spending at minimum, over $520 a month on commuter transportation.

Living in a downtown condo where you can walk or bike to work and amenities means that extra $520 a month stays in your pocket. Jamie walks to his firm, and when the weather is really bad, takes the bus. John is able to bike to the high school that’s only blocks away from their condo. Even if the couple takes the occasional taxi or bus ride, it’s well under what Brad and Michelle are spending each month.

For many prospective homebuyers, the thought of paying a similar down payment for a condo and tacking on monthly fees is unbearable. Once again, most underestimate the added costs of freehold home ownership. Jamie and John have far greater predictability in their monthly home maintenance costs, whereas Brad and Michelle have to consciously save in order to be ready to pay for big-ticket items, like windows and roofing. Financial counsellor Gail Vaz-Oxlade points out that most aspiring homeowners ignore the additional financial responsibilities of home ownership, focusing on saving a down payment and then equating a monthly mortgage payment with their current rent. As many learn the hard way, a freehold home requires a lot more financial investment than that! Let’s look at the sort of costs Michelle and Brad are independently responsible for:

  • Windows
  • Roof
  • Heating/ Air Conditioning
  • Lawn and garden maintenance
  • Snow removal
  • Gas
  • Hot water and tank rental
  • Home insurance

A rough estimate for Brad and Michelle, with an average lifespan on the windows, roofing and heating system, is that they need to be putting away $427 per month. This will ensure they have money in the bank to keep their home in good condition. In our hypothetical, these costs are subsumed in Jamie and John’s monthly $350 condo fee. John and Jamie never have to worry about these unpredictable and potentially crushing costs.

Lifestyle choices aside, our couples demonstrate that suburban home-ownership is not necessarily cheaper than a downtown condo. It’s important to understand the associated costs and responsibilities that each type of home ownership encompasses, so you can make the right choice for you and your family.