Commuting Costs Families More than Housing as Affordable Homes Drive Occupants Out of Town

Transportation consumes a larger share of household budgets than housing for many North Americans, a decade of research shows, even as policymakers largely ignore this reality and its negative impacts on housing costs, public health, and climate change.

In a November report, the Smart Prosperity Institute’s PLACE Centre identified extremely high transportation costs as a significant barrier to housing affordability. On average, 17.2% of Canadian households’ “shelter-related” budget goes towards transportation (largely ownership and use of personal vehicles), exceeding the 16.5% cost for mortgages or rent.

Eleven months earlier, the Affordability Action Council (AAC) had warned “transportation spending accounted for more than one-quarter of the before-tax income of very low-income households in the second quarter of 2023,” while transportation costs for everyone else crested well above the 15% widely recommended as the upper limit of what should be deemed affordable.

Sharply spiking vehicle purchase costs are a significant factor. “The median price of a used vehicle, which low- and middle-income families are more likely to purchase, increased by 110% between 2019 and 2023, from just under $19,000 to about $40,000,” the AAC report said. And the price of new vehicles “rose almost 70% from $39,000 to $66,000,” writes the AAC, citing 2023 AutoTrader data.

The small price premium on  electric vehicles would have had no “noticeable impact” on those numbers, Clean Energy Canada told The Energy Mix, since they still represented only a “relatively small portion of overall vehicle sales” in 2023, at 11%..

“Far from adding to cost-of-living pressures, EVs are actually one of the best ways families can save money on their monthly bills,” the Vancouver-based think tank added,, noting that Canadian EV drivers “end up saving about $30,000 to $40,000 over the course of the vehicle’s life ($3,000 to $4,000 per year) because EVs are so much cheaper to fuel and maintain.”

Higher interest rates are also hammering household budgets. Monthly car payments in Canada in 2023 were 30% higher for used vehicles, 20% higher for new ones, compared to 2020 values.

‘Drive Until You Qualify’

“I’m confident that once the worst of COVID is over, and we all get back to a normal way of life, we will see flat real estate values and a more healthy, balanced real estate market,” Toronto mortgage broker Vince Gaetano wrote in a February 2022 Money Sense post. He urged readers hungering for home ownership to sit tight through this predicted apex of unaffordability.

Sometime soon, he added, mortgage lenders would “go back to telling first-time buyers, ‘Drive until you qualify’.”

As Gaetano tells it, “driving to qualify” is simply the “normal” price Canadians have to pay to “board the wealth-building train of home ownership.” The reality is that for many Canadians stuck behind the wheel in gridlocked traffic, that train is nowhere in sight.

Priced out of amenity-rich, walkable neighborhoods, they end up in far-flung, single-zoned, poorly serviced suburbs where driving long distances to work, and shorter but rapidly accumulating distances for a carton of milk, are just what one must do to build a life and support loved ones.

Driving (Further) Into Debt

Being forced to choose between suburbs with lower-cost housing, where a dearth of services and a lack of public transit makes owning a car a virtual necessity, and well-serviced neighborhoods with sky-high housing costs is known as the “affordability paradox.” Numerous studies over the past decade reveal that paradox to be a devil’s bargain.

A groundbreaking case study published in 2012 by the Pembina Institute found that living in “location-efficient” neighbourhoods in the downtown—that is, amenity-rich neighborhoods with easy access to rapid transit—left households at least $300 per month better off than their car-dependent suburban peers. While the average $2,400 monthly mortgage on a three-bedroom home in Oshawa was less than half that of its $5,000 downtown equivalent, extremely high suburban transportation costs in the car-dependent suburb ($3,400 per month) ultimately made the pricier home in transit- and sidewalk-rich downtown Toronto easier on household budgets by a whopping $2,900 monthly.

Fast-forward eight years and a housing and transportation cost study by Victoria’s Capital Region District found the benefits of decamping to the suburbs shrank even more as transportation costs skyrocketed through 2016 and 2017. Where households in metro Victoria were spending $14,040 on housing, $7,291 on transportation, equivalent households in the bedroom community of Metchosin were spending an annual $15,876 on housing and $18,350 on transportation.

A 2015 study of Metro Vancouver found a similar pattern, where significant suburban transportation costs eroded the often marginal savings from buying homes outside the core. Here, low-income renters were at greatest financial risk regardless of where they lived, with “households making less than $50,000 per year spending 67% of their household income on housing and transportation.”

As 2024 drew to a close, unaffordable transportation costs were a North America-wide problem, with all but the wealthiest households suffering. A December report from the Victoria Transport Policy Institute found that low-income and working-class American households spent 21% and 23% of their budgets on transportation last year. Middle-income households spent 19%.

Driving Discontent, Accelerating Ecosystem Breakdown

As its latest bills aiming to tackle affordability reveal, the Ontario government puts a premium on speed. Its October, 2022 More Homes Built Faster Act pledged 1.5 million homes within the decade. Widely panned at the time as a measure that would only increase sprawl while weakening protections for farmlands and wildlands, the legislation has proven a very poor instrument for healing housing woes. Ontario’s fall economic statement reported housing starts in 2024 “nowhere near” what was necessary to meet the 2031 target, said CBC News, with projections out to 2027 on a downward trajectory.

Ontario’s recently-enacted Reducing Gridlock, Saving You Time Act likewise asserts the need for speed in quite literally assuming that maximizing mobility—by which the province means reducing congestion so that drivers can get from A to B more quickly—will cure a multitude of affordability woes.

The province explicitly connected those dots in a December update on its efforts to build the controversial Highway 413, namely the 90% completion of the 52-kilometre roadway’s “preliminary design.”

“Today’s milestone comes as a new report from the Canadian Centre for Economic Analysis (CANCEA) finds gridlock in Ontario is significantly impacting commuters’ quality of life and costing the economy $56 billion a year, further emphasizing the need to move forward on critical highway and road infrastructure projects including Highway 413,” the province said in a news release.

The message here would seem to be that all Ontario needs are more and bigger roads (at a currently projected cost of $28 billion) to get the economy “moving”. Left unmentioned is CANCEA’s central finding that “quality-of-life impacts of congestion are profound, at over three times that of the economic problem” — that is, having no option but to drive on overcrowded roads is making millions of people unhappy. CANCEA assigns a whopping dollar cost to that unhappiness, pegging the “social value” losses in that $56 billion congestion bill at $43.6 billion.

According to a global report released in February 2023, Toronto drivers averaged 199 hours in rush hour traffic in 2022. Vancouverites were close companions in traffic hell, clocking 197 hours.

Building More Roads Won’t Clear Congestion

While Ontario is trying to build out transit more quickly, its default to reduce congestion remains road-building. This flies in the face of abundant evidence that new roads simply attract more drivers, a phenomenon known as “induced demand.”

It also ignores persistent evidence that, given the option, people would rather stay put, building healthy and happy lives full of work and play without having to constantly hop in their cars.

Responding to a longitudinal study of lethal levels of ultrafine particulate air pollution in Toronto and Montreal published last August, experts urged measures to decrease the total number of cars on Ontario’s Highway 401 by building out public transit and bike lanes to better protect public health.

Sarah Buchanan, campaigns director at the Toronto Environmental Alliance, said whether policymakers are trying to ease the misery of commuters or protect public health, the “worst way to solve these problems is by adding more traffic, adding more cars.” 

“Smarter investments” like world-class regional transit systems will be particularly critical in the fight to counter the default narrative of “drive until you qualify”, she added.

And then there is the devastating connection between driving combustion engine vehicles and climate change. Citing the latest edition of The Atmospheric Fund’s annual Carbon Emissions Inventory Report, Buchanan said transportation emissions in all six of the municipalities and regions that make up the Greater Toronto and Hamilton Area  were “going in the wrong direction” in 2023,  increasing 4.7% to nearly pre-pandemic levels.  

“A whole lot of work and thought has been going into helping to get cash-strapped households out of their cars and on to quality public transit and their bikes, while policymakers work at cross purposes, building new highways, delaying transit projects, and tearing up bike lanes,” Buchanan said.  “It is really frustrating.”

Cover photo: Mike Hager/The Energy Mix