Housing Costs; Plan first, move once.

For the average Canadian, housing is typically the largest line item in their monthly budget. There is a general rule of thumb that you should be spending 30% of your income on housing. Canadians are spending as much as 50%. My advice? Spend 20% or less. I also recommend spending a lot of time shopping around and weighing your options before you move.

The cost of housing in almost every major city in Canada is increasing year over year. Once you find the place for you, buy it or rent it. Yearly increases in rent and interest rates are lower than the increasing costs of the rent and mortgages themselves. The sooner you nail down a place, the better.

Once you have a spot, stay there as long as it fits your lifestyle. Avoiding cashing out only to be greeted with more expensive housing. This also helps eliminate moving costs, give you leverage when you renegotiate services, and more. Every time you move, you risk needing to swap out furniture, buy appliances, and spend money that you wouldn’t need to otherwise.

If you can live far below your means, you’ll have more money to save and more money to spend on things you want. If vault ceilings and stainless steel appliances truly make you happy, that’s okay too. For some, a quiet, comfortable place to lay your head it enough.

Are you overspending on housing? Do you have any housing tips?

-Mike

 

 

Advertisements

The Allure of Luxury

One of the unfortunate side effects of the condo boom in Toronto is the surplus of luxury condos and a shortage of affordable houses. How is this bad? Well, pretty much every new condo built in the last 5 years is a luxury condo. Some are affordable but they come with costs that don’t really become apparent until you really take a step back and look at the condo living situation.

  1. Typically, the clusters of condos have a grocery store at the base of at least one building. Unfortunately, these are typically high end stores with name brand products. No store brand products in these smaller format stores. This means every time you go shopping you’re paying a premium on everything.
  2. These condos have lots of amenities but they’re only worth it if you use them. Too often to people like to talk about all of the awesome features of their building, only to never set foot in them. Additionally, if you own your unit, you’re paying for these everyday regardless.
  3. There are usually a lot of places to eat our nearby which can be tempting for some. I think this is typically a good thing, but some of the most mediocre restaurants I have ever been to are contained in these condo groupings (I’m looking at you, Liberty Village).
  4. This is a tough one. Do you really need this luxury living? A lot of people leave college having spent time living in less than ideal shared housing, and then make a jump right to a luxury condo. Can you spend a few more years sharing a house? How about splitting a modest apartment? There are other options out there.

More and more condos go up everyday, pushing people ever towards living in boxes in fancy towers. Some of us will hopefully continue to resist this urge, creating a need and want for reasonably priced housing without all the bells and whistles.

Canadians are addicted to home ownership, I just hope our thirst to own doesn’t destroy the affordability. Hopefully, we can use a little foresight and look to other countries and stop problems before they get out of control.

-Mike