Overview
Canada is reeling from an ongoing housing crisis. The housing crisis arose from a combination of factors:
- Rapid population growth. The rapid influx of immigrants has far outpaced the available housing stock, driving up prices.
- Financialization of housing. Foreign investors and large corporations often treat housing as an investment and artificially drive up prices.
- Low/stagnant incomes. Incomes have not kept up with the cost-of-living increases. The median incomes in Toronto and Vancouver do not even cover the rent for a one-bedroom apartment.
- High cost of building housing. The cost of building new housing in Canada is very high, in part due to excessive taxes and fees. This reduces profitability and hence the incentive for developers to start new projects.
- Red tape. Developers face lengthy approval timelines, scrutiny by multiple agencies, and excessive bureaucracy. This prevents them from starting and finishing projects in a timely manner.
The above factors combine to make housing unaffordable on a low or modest income. In this article, we will explore five ways to manage housing costs despite the crisis.
Method #1: Get a Roommate
The housing crisis is particularly pronounced in places like Toronto and Vancouver. The average rent for a one-bedroom apartment in those cities exceeds $2,300 and $2,500 respectively (source: Rentals.ca). However, smaller cities are not immune: the average rent for a one-bedroom apartment in Hamilton exceeds $1,800 per month. Some rents will be below average and some above average. However, the averages give a rough outline of what to expect.
If you live alone, all the costs would fall on you, and your budget may not have room for all the different expenses. Given the high costs, it may make sense to get a roommate. You could split the housing costs evenly. This may allow you to afford a space you otherwise would not be able to afford. By having a roommate or roommates, you could substantially reduce your housing costs and make more progress toward your goals.
Method #2: Move to a Cheaper Area
If you are located in a major urban centre and make a low to modest income, you may want to consider moving to a more affordable area. For example, rent in Hamilton may be lower than rent in Toronto. You may be able to afford a one-bedroom apartment in Hamilton but not in Toronto. Remember that some rents may be below the average and could still get you a high-quality place. The same goes for home prices: smaller or remote towns may offer lower home prices compared to major urban centres. Compare the average rents/home prices in various cities and factor that into your move.
Some people even move to another province where housing may be more affordable e.g. Alberta or Quebec. Some even move to the U.S. Consider all your options and don’t be overly attached to one area.
Method #3: Earn a Higher Income
Your income may be the greatest barrier to accessing higher-quality housing. There are many ways potentially to earn a higher income. Here are a few possible strategies:
- Retrain for a new career. You could learn skills like cybersecurity, data science, UX design, digital marketing, and more. It could be a matter of taking a few courses and earning a few certifications online.
- Earn a promotion. You could aim for a promotion at your current job. Don’t neglect the opportunities that may be right in front of you.
- Request a raise. If you have some tenure at your current job and have been doing well, you may ask for a raise.
- Take on a side hustle. Finally, you may earn money on the side by taking on an additional part-time job, selling art online, offering freelance services, or starting an online business.
We hope we’ve provided you with a starting point for increasing your income. It’s going to take time and effort on your part, but it may be entirely possible!
Method #4: Prioritize Fixed Expenses
It’s important to budget intelligently, given the ongoing cost-of-living crisis. Here are a few budgeting tips that may turn you into a pro:
- Prioritize fixed expenses. Make sure you cover essential expenses first, including rent/mortgage payments, car insurance, home insurance, and anything else that is non-negotiable. Once those expenses are taken care of, you can focus on more frivolous or variable expenses.
- Reduce variable expenses. Stop buying coffee at large coffee chains. Cook your own food at home. Don’t buy too many new clothes or gadgets. These common-sense approaches aim to reduce your variable expenses in every way possible.
- Use the 50/30/20 rule. If you can, spend 50% on needs, 30% on wants, and 20% on saving/debt repayment.
- Automate your bill payments. This may help ensure you never miss a bill payment again! Just make sure you have sufficient funds to cover the transactions.
- Review your expenses. Review the past month’s expenses and see which expenses were frivolous and/or could be reduced. Did you buy coffee at large coffee chains too many times or buy lunch at chain restaurants too often? These purchases could result in significant expenses over time.
Adhering to the above tips may help you maintain an effective budget and manage housing costs.
Method #5: Lower Your Utility Bills
Another way to manage housing costs more efficiently is to lower your utility costs. Typical utility bills may include heating, hydro, water, and more. You can reduce your hydro bill by minimizing wasteful use of electricity. For example, turn off the light when you leave the room, unplug devices you’re not using, and so on. You can reduce your water bill by reducing the amount of time you spend in the shower. You could potentially lower your heating costs by only using heating when it is required.
Consider all of the above ways to reduce your utility costs. This may help make your housing costs more manageable.
Conclusion
While the housing crisis has touched everyone’s life in one way or another, there are ways to manage housing costs more efficiently. In this article, we reviewed five potential strategies to do just that.
Despite our best efforts, life can get too expensive. If you need quick funds to cover immediate expenses, apply for a personal loan via LendProConnect. We don’t check your credit score or credit report during the quick online application process. Funds may be deposited in as little as 24 hours!
