I'm lucky enough to live in a beautiful part of Canada.
I'm also lucky enough to have a wonderful wife. And this is a picture that shows both.
Or perhaps you prefer one of the tourist type photo's you see on the image sites.
There is a problem with the city though. It is the leasts affordable place to find a home in North America. More expensive than New York, more expensive than California, more expensive than Hawaii.
Okay, maybe not in terms of actual price of the houses. However, if you compare the average price of a home to the average wage of a worker this is what you come up with.
The average home cost 11x the average workers salary. Compare that to number 2 and 3 spots which are California at only 8x the average workers salary
Or perhaps a different look at affordability. This study looks at income vs cost to own a house. A number of "1" means it is affordable. Less than 1 means cheap and the higher the number the more expensive it is.
Now typically when the city center gets expensive people move to the surrounding areas aka suburbs. However, I live in a suburb and I can tell you its not cheap here either.
Source
The cheap areas on the map still have prices in the $900,000 range. Considering the average mortgage rate right now is about 5.2% that means paying almost $4000/month just to the bank in interest on a home.
And how much is average income?
But how much do you get to keep?
Okay....
Quick math.
To afford a home you need to pay the bank $48,000 in interest yearly. If you make a median wage you get to take home $46,390 pay yearly.
Result: The average person can't afford to even make an interest only payment on a home. Actually paying a mortgage and having money for food, clothing, electricity? Not possible for the majority of people.
What do people do for housing?
Well, lucky people purchased when prices were lower. Inherited homes from their parents. Of for many younger people they live with their parents long after they are at an age when they should move out.
For the rest of people the choices are:
- Rent a house
- Rent an apartment
- Find a room for rent.
Option #1 -- Rent a house.
Now a house for rent will not be cheap. In my suburb of Vancouver (Abbotsford) the least expensive house for rent is a 3 bedroom home and here is the listing from rentals.ca
So an average person brings home $46,000 / year and this home would cost him $30,000 / year. That doesn't leave a lot for vehicle, utilities, food and so on. Typically rent should be no more than 30% of take home income. If two people are both working making $92,000/year then the cheapest home in Abbotsford becomes marginally affordable. However, if one person loses their job. If one person makes less than average then can't afford the home.
Option #2 -- Rent an apartment.
Now it gets a little less expensive here. A bachelor suite (an apartment with no bedroom) starts at $1150 but it is absolutely a single person place.
Need more space? $1300 will get you an apartment with a bedroom to sleep in.
Married with a child? $1750 will get you a two bedroom apartment. Not exactly affordable but that's what many people will rent if they are married with a child. Parents share a room and children share a room.
Now those numbers are fine if you are making an average Canadian wage but what about those people who are working for minimum wage?
For them their wage for working a full time job will be about $26,000/year. Using the 30% of income for housing that means they should be paying about $650/month for rent. Even the cheapest apartment is close to double that amount.
What's a person making minimum wage supposed to do?
Option #3 -- Find a room for rent.
Now there are very few rooms for rent. The cheapest I found on rentals.ca was this one here.
Just a bare room without furnishings and it is still $200/month more than the recommended amount based on a full time workers wage.
But it gets worse. The least expensive rooms are typically for female residents only. Apparently male tenants aren't as desirable. Since I have two sons that means they are in a tougher position. A room for rent that allows a male occupant starts at $995/month.
And it gets worse. There are a lot of people looking for a place and very few places available (only 6 listings in an area of a half million people). The owners tend to be very picky. No smoking. Must work full time and leave during daytime hours. Quiet. Have a good credit score and letters of recommendation from previous landlords. Just starting out? Bad credit? Forget it....you won't even be getting a callback.
Any other options?
Hotel rooms and motel rooms are booked to capacity and all charging very high rates. $4000/month for a basic hotel room. $9000/month for a nice hotel room. Hotel's aren't going to be an option.
Which leaves.
....Being homeless...
Homelessness is a very real problem in this area.
There are people camping out in the parks. Living under the overpasses. Living at the rest areas and park and ride. In fact the above picture was taken near the local Wal-Mart store and has gotten so bad the fire department won't go to calls in the area without a Police escort.
Why such a big problem?
The Fraser Valley (where Vancouver is) has a beautiful geography. It has the warmest climate in all Canada. It has beautiful ocean, beautiful parks and is surrounded by gorgeous mountains. It is also just a quick trip to the USA on the south.
Unfortunately you can't build on the ocean. You can't build across the American border. You can't build on steep mountain cliffs. Result: There is very little land to build on.
People see the beautiful pictures. Find out about the good job situation. They hear about the great climate. Of course they want to move here. Especially people coming from other countries!
The problem is there just isn't enough space to put everyone and that's becoming a bigger and bigger problem.
and its not just a Vancouver problem
ALL the major cities in Canada are having affordability problems. The cities people from abroad have heard of tend to have the worst prices. Toronto and Vancouver being the absolute worst. However, most major cities and a lot of the smaller ones too are becoming less and less affordable.
What's a person to do?
Being a frugal person like myself finding an affordable housing option is important and this is what I found.
The image is from Google streetview. However I'm the owner of the house so I think I can use the image.
This is a 4 bedroom home which rents for $650/month. Affordable by someone even working minimum wage.
The town itself is a little boring but it is also affordable, safe, and has all the things you need (restaurant, doctor, grocery store, recreational facilities, theater, hospital and more). There are jobs to be had and even at minimum wage you can still afford to have a life and get ahead.
It feels like a town from the 1950's and still is affordable...like the 1950's.
$650 too much for you? My brother in law is a property manager for a few of the apartments in town and rent with utilities can be as low as $325/month. Even the unemployed getting assistance from the government can afford to live in a place like that. Safe and secure with money left over for food, internet, and recreation.
Why someone would choose to be homeless and live in a big city when they could have a nice little place of their own in a small community is a mystery to me.
However, that's a little glimpse on housing in Vancouver and options from Canada....from a cheapskate like myself.
Hope you found the article interesting
and feel free to join the weekly topic from #frugal not stingy and tell about housing in your area.
Thanks!
