When you buy a house the first thing your eye goes to is the sticker price. But buying a home comes with a major hidden cost that doesn't show up in the MLS report: Transportation costs could more than eat up the savings of a lower-priced home in the suburbs.
The concept is called location efficiency and it's the amount of time, energy and greenhouse gas emissions you spend getting from where you live to the workplace as well as your other frequent trips. And location efficiency may be the secret sauce to saving money and getting that house in the neighbourhood you never thought you could afford.
When you start looking at the examples you can really see the savings. The Pembina Institute and the Royal Bank of Canada put together a report and interactive website called Location Matters that has got some great scenarios. When you click and add the transportation costs you really see what a neighbourhood can do for the affordability of a house.
Transportation is the average family's second largest household expense and the average annual ownership costs for a late-model Camry comes to $7,500 a year (according to the Canadian Automobile Association).
Kurt Borth is a PhD candidate in the Human Geography and Planning department at the University of Alberta. He's done a lot of research on this issue and he's found that the biggest economic impact comes when you scale down from a two-car household to a one-car household. Take that $7,500 a year and after 10 years that's $75,000. That makes that home in the nice walkable neighbourhood suddenly seem a lot more affordable.
Location efficiency doesn't mean suburbs are bad and downtown is good -- it means that if you live close to where you work, play and shop you will save money, time and maybe most importantly, your health.
It turns out reducing your commute can make you a happier, healthier person.
"So when you talk about sprawl or these non-efficient locations a lot of bad things come up. So there is increased diabetes rates, increased obesity rates, heart disease. There is even a study out of Sweden that says that divorce rates are higher in these neighbourhoods," says Borth.
Non-location efficient development leads to poor air quality, physical inactivity, higher chances of getting in a car accident and mental health impacts.
And just anecdotally this makes sense. Who among us hasn't been stressed after a longer than average drive back from work due to a car accident or road construction?
And when you scale up the idea of location efficiency to the neighbourhood level that's when cities get involved. Cities like Edmonton are losing money on the new neighbourhoods that they are building on the edge of town. The cost to maintain roads as well as services like transit, fire and police, parks and playgrounds and libraries is well over what these neighbourhoods bring in via property taxes.
Cities are realizing this and moving to address it. Scott McKeen is a city councillor in Edmonton and he's seen how these new suburban neighbourhoods can become more location efficient.
"If we're going to build this new neighbourhood, and it's way out there, let's design it so the people that move there can walk to a grocery store, can walk to a transit stop, can walk to a theatre, and they don't have to leave their community, necessarily, to have those urban experiences," says McKeen.
McKeen himself started in the suburbs, "But what we did do when they were still teenagers, was move downtown and live in a loft, just as a kind of an experiment. It lasted two years. I loved it. The kids loved it. They all live in the core now, and they all take transit, and they ride bikes, or they take cabs or they take Uber."
For McKeen, a councillor for a centrally located ward, it's about lifestyle: "So, we're talking about a location efficiency, but there's so much more to this lifestyle than I think we have to talk to people about. You're going to save money, you're going to be easier on the planet, and you might make more friends than you've ever had before in your life."
"It's not urban or suburban, it's location efficiency. And I actually really like that term," says McKeen. "Part of it is, living close to where you work, so you don't have to do a long commute, and having a neighbourhood designed so you don't have to have two cars, because dad's taking the kids to soccer and mom wants to go to her Pilates class. Well, hopefully she could walk to her Pilates class."
After a 50-year run of car-centric urban design there are signs that the pendulum has started to swing the other way. Younger people are driving less, suburbs are getting denser and even big lending institutions like Fannie Mae are realizing that mortgages to people in location-efficient neighbourhoods are less likely to default.
Location efficiency scholar Kurt Borth walks the talk, or the LRT in this case. He lives within walking distance of excellent transit, shopping and amenities which means he is saving big time on transportation expenses and time. Photo David Dodge, Green Energy Futures
Kurt Borth who is studying location efficiency at the University of Alberta speaking to David Dodge of Green Energy Futures about the hidden costs of where you live. Photo David Dodge, Green Energy Futures
The Pembina Institute and the Royal Bank compared location efficiency of various locations in the Toronto region and created this tool: https://www.rbcadvicecentre.com/pembina-location-matters
Location efficiency means you live close to work, play and shopping and save big bucks on transportation, a hidden cost of life in the burbs. Photo David Dodge, Green Energy Futures
According to UofA PhD candidate Kurt Borth living far from work, play and amenities can lead to diabetes, obesity and heart disease and divorce. Photo David Dodge, Green Energy Futures
As UofA PhD candidate Kurth Borth explains, whether you live in the burbs or the inner city location efficiency means you live close to work, play and amenities and save big bucks and a lot of time by doing so. Photo David Dodge, Green Energy Futures
Edmonton city Councillor Scott McKeen lived a suburban lifestyle for part of his life and then moved to the city's core: "So, we're talking about a location efficiency, but there's so much more to this lifestyle that I think we have to talk to people about. You're going save money, you're going be easier on the planet, and you might make more friends than you've ever had before in your life." Photo David Dodge, GreenEnergyFutures.ca
People may not know what location efficiency is, but they might say: "I moved here so I could walk to the grocery store, and I could hop on a bus right here and go over to the university, or go to my workplace. It's easy. It's cheap. I like it," but location efficiency would never be the terminology they'd use. It's lifestyle. This is about lifestyle we're talking about, and I think the emerging generation really gets it," says councillor Scott in Edmonton, Alberta. Photo David Dodge, GreenEnergyFutures.ca
Studies peg average commute times between 32 and 42 minutes in Toronto, but growing numbers commute for more than one hour one way. Location inefficient living can cost you up to 40 per cent more for energy costs. Pictured is the Gardiner Expressway in Toronto. Photo David Dodge, Green Energy Futures
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