Let’s take as an example two families, each of whom buys a single-family home. Both families are composed of two working adults and a young child. They earn the average income of the greater Montréal area. However, each makes a choice that will have a major impact on its savings.

Comparable expenses

The Beauséjour family bought a onestorey house on the South Shore for $217,000. The Arsenault family decided to buy a cottage in Montréal for $297,000. Over a 25-year period, which of the two homes will be the greater family asset?

The Beauséjours make yearly mortgage payments of $14,400, while the Arsenaults’ yearly mortgage payments come to $23,448. Despite the apparent savings at the time of purchase, the Beauséjours spend $31,421 annually on taxes, public transportation and the costs related to having two family cars. The Arsenaults only spend $23,783 for taxes, public transportation and the costs related to their single car.

The reality is that the two families’ expenses end up being about the same, since each family is using the money in their own way, saving on certain expenses but spending more on others.

Favourable indexing

However, we must not forget to check the progressive value of each family’s home. The value of the Arsenaults’ home is likely to increase by 5 percent per year, while the Beauséjours’ home will increase by 4.3 percent per year, using the average indexing rates registered over the past 15 years. These rates were calculated using data from the Greater Montréal Real Estate Board.

Considering the purchase value of both homes, the family asset of the Montréal family’s home will be around $380,000 greater than the home of the family living on the South Shore. The value of the Arsenault family’s home will be around $995,000 in 2029.

Living in Montréal is possible… and it pays!