Transportation eats up a bigger slice of most Canadian household budgets than housing does — roughly 17.2% of shelter-related spending goes to vehicles, fuel, and insurance, while mortgages and rent account for about 16.5%. That single percentage point flips the usual assumption that your home is the biggest cost you carry. For anyone buying a home farther from work to save on price, the numbers suggest the commute might be costing more than the house itself.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
That gap between city and suburb is not a fluke. A 2012 case study from the Pembina Institute found that households in location-efficient downtown neighbourhoods ended up at least $300 per month better off than their car-dependent suburban peers — even after accounting for higher rent or mortgage payments. The difference comes down to what you spend getting around. Here’s what you actually need to know.
The term you need to know is location efficiency.
What I tend to notice is that most buyers focus on the sticker price of a home and the mortgage payment, but the real monthly number includes how you get to work, buy groceries, and manage daily life. That second number is often the bigger one.
Comparing the full monthly cost of downtown vs. suburban living
Take a concrete example from the Toronto area. A three-bedroom home in downtown Toronto carried an average monthly mortgage payment of about $5,000, while the same size home in Oshawa averaged roughly $2,400, based on data from the Smart Prosperity Institute. That looks like a clear win for Oshawa — until you add transportation.
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| Location | Monthly mortgage | Monthly transport costs | Total monthly cost |
|---|---|---|---|
| Downtown Toronto | $5,000 | ~$500 | ~$5,500 |
| Oshawa (car-dependent) | $2,400 | ~$3,400 | ~$5,800 |
The suburban household ends up spending about $300 more per month overall, even with a mortgage that is less than half the city price. That $3,400 monthly transport figure includes loan payments on a vehicle, fuel, insurance, maintenance, parking, and tolls — all costs that rise with distance.
And this is before factoring in closing costs, which typically run 1.5% to 4% of the purchase price, or the fact that suburban homes often require a second car. The real cost of a long commute is not just the time you spend in traffic — it is the cash you burn every month to sit there.
Where homebuyers misjudge the commute trade-off
Only looking at the mortgage payment
Most buyers compare list prices and monthly mortgage figures, then stop. That misses the biggest variable. In the Toronto case above, the mortgage saving from moving to Oshawa was $2,600 per month. The extra transportation cost was $2,900 per month. The mortgage comparison alone pointed in the wrong direction. What I would do is look at the total housing-and-transportation number before deciding where to buy.
Underestimating what a car actually costs per kilometre
A full-size pickup used for a 40 km round-trip commute can cost $700 to $1,000 per month more than a midsize SUV, before parking. The total annual cost of that pickup — including financing, fuel, insurance, depreciation, winter tires, maintenance, and registration — runs about $25,580 per year, or roughly $2,130 per month. By contrast, a compact sedan like a Honda Civic costs closer to $13,500 annually, and a midsize SUV like a Toyota RAV4 costs about $17,000. Many suburban households own two vehicles, doubling the hit.
Ignoring location efficiency when comparing neighbourhoods
A household in Metchosin, British Columbia, spends about $18,350 per year on transportation, while a similar household in metropolitan Victoria — closer to transit and amenities — spends about $7,291. That is an annual difference of over $11,000. The neighbourhood itself determines the cost, not just the distance to work.
Assuming remote work will last
During the pandemic, many buyers stretched their commute based on the assumption they would keep working from home. As return-to-office mandates have increased, commute times have bounced back — Toronto’s average one-way transit commute hit 56 minutes in 2023, up from 52 minutes in 2020. A home bought during a remote-work period may become a commuting headache within a few years. Buyers who lock in a long drive based on current work arrangements can end up with a monthly cost structure they did not plan for.
How to evaluate total housing and transportation costs before you buy
The process of comparing a home’s true cost comes down to three phases: estimating the housing numbers, estimating the transportation numbers, and comparing them side by side. Each phase follows a specific order.
Step 1 — Calculate your all-in housing cost
Do not stop at the mortgage. Add property taxes, homeowners insurance, condo fees (if applicable), and regular maintenance. For a home in Ontario, property taxes typically run 0.5% to 2.5% of assessed value annually. Toronto sits around 0.66%, while Montreal is closer to 1.6%. Also include closing costs — legal fees of $800 to $2,500, land transfer tax, title insurance at $250 to $500, and a home inspection at $350 to $700. These are not one-time costs; they affect how much cash you need upfront and what your monthly carrying cost really is.
Step 2 — Estimate your transportation costs by location
Start with the commute distance and multiply by the number of days you drive each week. Use the government fuel consumption rating for your vehicle — or if you are buying a new vehicle, check Natural Resources Canada ratings — and multiply by current fuel prices in your province. Then add insurance (which varies by city and vehicle type; Ontario full-size pickup insurance runs $2,400–$3,200 per year), parking costs, tolls, and an amortized share of maintenance and winter tires. A useful shortcut: the Canadian Automobile Association publishes per-kilometre driving costs for different vehicle classes. If you are considering a pickup for commuting, know that the five-year, 100,000 km cost of an F-150 is about $42,000 more than a RAV4 and $55,000 more than a Civic, even after accounting for resale value.
Step 3 — Compare the combined total across neighbourhoods
List three or four neighbourhoods you are considering — one urban, one suburban, and one exurban or rural. For each, add the estimated monthly housing cost and the estimated monthly transportation cost. The neighbourhood with the lowest combined number is the most affordable, regardless of which has the cheaper home. In the Toronto example, the downtown option won by $300 per month. In Victoria, the location-efficient choice won by over $11,000 per year. The same logic applies in any Canadian city with a meaningful transit network.
What is changing — upcoming policy and planning shifts
Ontario’s More Homes Built Faster Act set a target of 1.5 million homes within a decade, though housing starts in 2024 were well below that pace. The province has also linked housing and mobility explicitly in its Highway 413 updates, suggesting that commuting infrastructure will remain part of the affordability conversation. For buyers, the key takeaway is that planning policy can shift commute times and costs — a highway expansion may cut travel time in one direction while a transit funding cut may increase it in another. The safest approach is to buy in a location that works well without assuming future infrastructure fixes.
Frequently asked questions about commute costs and home buying
Does the commute cost argument apply in smaller Canadian cities? ▾
How do I estimate transportation costs if I am moving to a new city? ▾
What if I work from home full time? Does the commute still matter? ▾
Is it always cheaper to live downtown? ▾
How does an electric vehicle change the commute cost equation? ▾
What is the “drive until you qualify” mentality? ▾
The affordability question that still goes unanswered
Policymakers have spent years trying to bring down home prices, but transportation costs have risen faster than most people notice. The Affordability Action Council has pointed out that transit-connected, location-efficient neighbourhoods are the most under-supplied housing type in Canada. Building more homes near transit, rather than farther out, is the single adjustment that would lower the combined cost of housing and transportation for the most people. Until that happens, the burden falls on buyers to calculate the full monthly number — not just the mortgage — before signing.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Why some Canadian cities are experiencing a housing crisis while others are thriving.
Sources and Further Reading
Will the next generation of Canadians ever be able to afford homeownership? — Explores the generational affordability gap and what it means for buyers today.
Is the condo market in Canada a safe investment or a risky bet? — Compares the costs and trade-offs of condo ownership versus suburban houses.
The Energy Mix (2024). Commuting costs families more than housing as affordable homes drive buyers out of town. 🔗
RE/MAX Canada (2024). The impact of commute time on home buying. 🔗
Square Yards Canada (2024). Hidden costs of buying a house in Canada. 🔗
Ridez (2025). True cost of owning a pickup truck for daily commuting. 🔗
