This small town property you are considering might not be as affordable as you think

Before you give up on the city, make sure you are aware of the additional costs of rural living

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Along with “above demand” or “seller’s market” one of the most painful expressions in the Canadian homeownership lexicon has to be “poor house”.

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And there is many Canadian owners who fall into this category. According to a recent edition of Ipsos’ MNP Consumer Debt Index, 32 percent of Canadian homeowners considered themselves poor in housing in August.

There isn’t a single reason why so many Canadians can afford their mortgages and nothing else, but at a time when people are increasingly looking to suburbs and small towns for affordable housing, buyers should be aware that life in the sticks might be more expensive than them. to anticipate.

This is because there are many areas where living in a small town can actually cost more than what you are used to paying in town. Here are a few you should know so that you know how to factor them into your housing budget and give you a clear idea of ​​what non-urban home ownership is really going to cost you.

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Transport

Depending on your travel needs, transportation costs can explode when you move to a small community.

Getting around with just one car and public transportation can be convenient for a family living in Toronto, but if that family moves to Cobourg, some 120 km east, and both parents have to commute one hour to town each day, this might require the purchase of a second car. You will also need to fill your car (s) with increasingly expensive gasoline.

“Living an hour outside of town, a car is a significant additional expense that is required,” says Dan Plowman, who heads Dan Plowman Team Realty, based in Oshawa, Ont. “Normal wear and tear on your vehicle, fuel costs, financial payments, and regular maintenance are just a few of the additional costs. “

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If you’re lucky enough to find a home on a commuter line like Ontario’s Go Transit or British Columbia’s West Coast Express, you may be able to avoid the extra vehicle and fuel costs, but you you still need to calculate how long your trips will cover. you every month.

If you live in Orangeville, for example, and take the Go bus to Union Station in Toronto, it will cost you $ 13.75 each way. If you do five round trips a week, that’s over $ 550 a month, although you can earn a few bucks each way if you pay with your Presto card.

Assurance

We may perceive life as riskier – and therefore more expensive – in the city, but insurance companies don’t necessarily see it that way.

Since fire and emergency response teams typically use fewer resources to cover greater distances in rural areas, insurance companies often charge more for home insurance there than. in the big cities.

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The average cost of insuring a home in the Windsor-Essex or Sudbury areas of Ontario, for example, is currently around $ 2,000 per year. It costs on average less than $ 1,400 in most areas of the GTA.

Although British Columbia and Ontario have the highest home insurance premiums in the country, according to the Insurance Bureau of Canada, they are closely followed by Alberta, Saskatchewan, Newfoundland and the Manitoba. Extreme weather conditions and relatively high crime rates in these provinces are helping to keep upward pressure on insurance rates.

The cost of remoteness

When a city’s business community is small, the lack of competition means that businesses and skilled tradespeople may not need to compete to the same extent as they would in the city. .

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This could cause you to pay more for your car maintenance or home repairs. And if you’re moving to one of the many areas where daycares have downsized or closed during the pandemic, you might also consider higher monthly fees to put your kids in daycare.

Being on a farm or cottage can also mean using your own septic system. Septic tanks aren’t that expensive to maintain – credit counselor Sandy Lyons says it might cost “a few hundred dollars” a year – but replacement can cost tens of thousands.

It’s important to remember that as a home buyer, it is your responsibility to budget for most of these costs. Just because your mortgage broker tells you you can afford a loan for a certain amount, doesn’t mean he has covered all of the extra costs you might have to pay once you’ve moved.

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“These costs are not taken into account by lenders when qualifying the borrower for mortgage financing,” says Dalia Barsoum of Streetwise Mortgages in Woodbridge, Ont. “Lenders take into consideration property taxes for the property being acquired and a utility allowance based on square footage.”

Opportunity costs

Christopher Alexander, president of Re / Max Canada, believes there is another kind of cost – an opportunity cost – that homebuyers need to be honest about when they leave town.

This will not appear in your balance sheet, but it still deserves special attention: will you and your family be happy living in a rural environment for the long term?

“My experience is that people’s needs and wants don’t change overnight. So if you are used to an urban environment – you walk everywhere, you have entertainment options and dining options – and then you move to the countryside, where your nearest destination is a 25 minute drive away, that is. is a big adjustment to make, ”says Alexander.

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Sacrificing the amenities you’re used to might not seem like a financial calculation, but if the charm of your small town wears off and you feel like coming back to town after a few years, you might be buying in a more expensive market than that. that you left behind – and trying to sell one that might not have the same mojo it had during the height of the pandemic.

“I think a lot of people who made these decisions in 2020 and 21 are going to start realizing the gravity of them, probably in the latter part of 22 and 23,” Alexander said. “And I think we’ll see another change. People will become mobile again and consider potentially going back to where they came from.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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