# Methodology — Ontario City True-Cost Rankings (Q4 2026 edition)

## What "true monthly cost" means here

For each city, the ranking estimates the all-in monthly cost of owning a
typical home, built from three components:

```
true monthly cost
  = mortgage payment (principal + interest)
  + property tax / 12
  + home insurance / 12
```

## Inputs

1. **Home price** — the most recent published benchmark or average sale
   price for the city (August/September 2026 where available; see
   research.md for the per-city figure, what it measures, its month, and
   its source). Figures come from local real estate boards, CREA, TRREB,
   or other reputable published reports. Every figure is cited.

2. **Mortgage terms** — 20% down payment (80% financed), 25-year
   amortization, monthly payments, at a **4.50%** nominal rate compounded
   semi-annually (the Canadian convention). The 4.50% figure is the best
   available uninsured 5-year fixed rate published for Ontario as of
   October 6, 2026 (Ratehub / mortgagerenewalhub reporting ~4.49%
   uninsured; best high-ratio 4.34%). Because the scenario uses 20% down,
   the uninsured rate is the correct comparison.

   Canadian monthly payment formula:
   ```
   i = (1 + 0.045/2)^(2/12) − 1        # effective monthly rate
   payment = P × i(1+i)^300 / ((1+i)^300 − 1)
   ```
   Sanity check: $400,000 principal → $2,213.89/mo.

3. **Property tax** — 2026 residential tax rate for the city (per
   research.md; 2025 rate used only where 2026 is not yet published, and
   flagged). Annual tax = price × rate; divided by 12. Rates are the
   combined residential rates as published by each municipality.

4. **Home insurance** — $2,235/year ($186.25/month), the 2026 Ontario
   average from Rates.ca's Home Insuramap report (via Insurance Business
   Magazine, June 2026). Applied uniformly: a documented simplification,
   since insurance varies by neighbourhood and home — northern cities
   trend higher, southern lower.

## What is NOT included

Land transfer tax, closing costs, CMHC insurance (not needed at 20%
down), utilities, maintenance, condo fees, and rate changes at renewal.
These vary too much by buyer to rank fairly; the three included
components are the ones every owner pays and the ones that differ most
by city.

## Honesty notes

- These are **estimates for comparison**, not quotes or appraisals.
- Mixing benchmark and average prices across cities is imperfect — the
  per-city table states exactly what each figure measures.
- Data months differ slightly by city (boards publish on different
  schedules); each figure's month is shown.
- Reproducible: `compute.py` in this folder regenerates the full table
  from `city-data.csv`.

## Quarterly refresh

Each quarter the prices, rate, and tax rates are re-pulled and the
ranking re-run. Methodology stays fixed so editions are comparable.