These days homebuyers are typically faced with a decision on where to buy – a bigger, cheaper home in the suburbs or a smaller, more expensive home in a more central location.
The decision is so common that HGTV has created a show called “Urban Suburban” where homebuyers weigh the pros and cons of each when making their purchase decision.
A study conducted last year suggests that many of us are choosing suburban over urban – leading to neighborhoods that reach even farther away from the central downtown area.
When we bought our house two years ago we faced this decision and considered many factors that come along with it. For us, there were a few important factors: cost, lifestyle, commute to/from work and access to amenities.
One of the biggest factors in the urban vs. suburban debate was cost. Our city is very spread out and while there are some new developments in urban areas, for the past couple decades the city has grown out and now has many distant suburban neighborhoods surrounding the downtown core.
The inner city homes near downtown are centrally located but cost significantly more than a comparable suburban home.
How much more? Our house is approximately 2,000 square feet and was brand new when we bought it for $450,000. At that price point in an urban area that price would buy us a 1950s bungalow with approximately 1,000 square feet.
We wanted something newer with a yard to (eventually) raise a family in a safe neighborhood that had access to schools and amenities.
A comparable urban house would cost about $750,000 – or 67% more than our suburban home. That’s a huge jump and not one I was comfortable with.
Choosing a more affordable suburban home meant our mortgage payments would be $1,650 rather than $2,700. The difference of $1,050 gives us more freedom – to invest, go on vacation or put more money towards the mortgage principal.
Another factor we considered was the different lifestyles in urban vs. suburban homes.
An urban home meant we would be closer to the action – popular pubs, local markets, restaurants and nightlife would be within walking distance (or only a short drive).
A suburban home meant we would be further away from the nightlife but would be closer to recreation centers, shopping and large parks.
The decision was pretty easy for us – we plan on starting a family eventually and would like to be closer to recreation centers, parks and shopping. We don’t dine out often and rarely go to pubs, so it wasn’t nearly as important to be closer to them.
Potentially the biggest drawback in choosing a suburban home is the commute.
If you are lucky enough to work at/near your home – it’s no problem.
My wife works at a school about 15 minutes driving distance away and I work downtown – in the center of the city.
To get from a suburban neighborhood into downtown means the cheapest and most efficient commute is through public transit.
It’s a longer commute than living in an urban area and it’s more expensive. I pay for a monthly transit pass and drive to the train station. My commute one way is typically 35 minutes. If we lived in an urban area we likely wouldn’t need a second vehicle and I could walk to work (20-25 minutes).
More time spent commuting means less time to prepare meals, and more money spent on take out meals (another cost we considered).
Here’s an estimate of the monthly costs what we used to figure out whether living in the suburbs made more financial sense than living in an urban area:
|Mortgage payment savings||1,050.00|
|Second vehicle costs (est.)||(200.00)|
|Lower property taxes||75.00|
|Additional meals out||(50.00)|
|Total Monthly Savings (Suburban)||
The money we save every month usually gets invested towards retirement or is used to pay down the mortgage.
Conclusion: for us choosing suburban over urban made sense. I am hoping to retire early and saving money every month will allow me to do that. I don’t mind the longer commute (most days) and enjoy having a larger home with more greenspace – something we likely couldn’t afford in an urban area.
Do you prefer urban or suburban?