There used to be a time when some Canadians would strive for home ownership – maybe choosing to rent or live at home until they’d saved enough for a down payment.
While the median price of a home in Canada fell by 2.8% to $757,100 from 2021 to 2022, prices are still above pre-pandemic levels. As a result, Canadians may be choosing to rent a little longer, or delay their plans to buy a home indefinitely.
And for those who were hoping to make enough to cover rent on a comfortable space? Unfortunately, rent isn’t cheap either. On average, Canadians are paying $2,024 in rent every month – a number that’s gone up 12.4% between November 2021 and November 2022.
For homeowners whose mortgages have come up for renewal, or others who’ve exceeded their trigger rate on their variable-rate mortgages, monthly payments are increasing due to the Bank of Canada’s rate hikes.
Why does rent keep going up?
The simplest answer? Lack of supply, increased demand. According to a report by the Canada Mortgage and Housing Corporation (CMHC) in January 2023, prices are being driven up by population growth, people moving within Canada to other cities and provinces, expensive housing prices and students returning to on-campus learning.
Population spikes in places like New Brunswick have led to average rents rising by 19% over two years.
The trend of renovictions – the act of evicting tenants to renovate a building – in places like Nova Scotia is also creating concerns about rental prices increasing.
The current state of housing isn’t ideal and, according to Statistics Canada, 44% of Canadians say they’re very concerned about their household’s ability to afford housing or rent. Below, we share some tips to help any homeowner navigate a period of high housing costs.
Budget. Budget. Budget.
When you’re trying to save money, a budget might be the last thing on your mind. But it can be your best friend when you’re facing difficult times, giving you a clear picture of your finances and opportunities for the future. First, run the numbers. What are your living expenses? If you’re new to budgeting, you can start with a spreadsheet or notepad, or download a budgeting app to simplify things. Then, take your after-tax household income and determine how much is being eaten up by your fixed costs (monthly rent or mortgage plus necessities). If it’s more than 55%, it may be time to reassess some things in your budget or living situation.
Increase your income, if you can.
Easier said than done, right? But we’re not talking about storming into your boss’s office and demanding a raise like you’re in a mockumentary television series about everyday office people (we’re here for the confidence, though). Maybe you have an idea for a side business, or you have some items you can list on local buy-and-sell groups. Or maybe this is the time to consider building on your skill set. As you enhance your resume, you may be in a better position to have that salary chat. You deserve to be paid competitively!
Homeowner? You may be able to downsize or move somewhere that will offer relief on your mortgage payments. Renter? While you may be comfortable in your current location, you might be able to find something more affordable – after all, any house can become a home with time, love and care. Moving isn’t for everyone. But the added savings you might uncover from making a change could offer greater financial control, and that alone is priceless.
Find a roomie.
If you have the space, a roommate can help you pay your rent or mortgage. Additionally, if you’re a homeowner, as you pay down your mortgage balance, renting out your space could eventually become a great revenue source.
Know your options.
Depending on your situation, you may be able to access government assistance to obtain housing. You can find out which options are available to you by reviewing your province’s affordable housing programs. In addition, you may be able to find information on your rights as a tenant.