How to cope with high housing prices when you don’t have 1 million

Unless you’re living in Calgary or Edmonton, which are currently feeling the effects of plunging oil prices, you could be dealing with added debt problems due to the rising cost of housing in your city. In July, house prices rose over 2 per cent in Toronto, Hamilton and Ottawa and were up 1.7 and 1.6 per cent since June in Victoria and Vancouver, respectively. Since last year, housing prices have risen 9.9 per cent in Vancouver and 8.4 per cent in Toronto—which is adding to the mortgage debt of Canadians who have purchased a new home.

In Vancouver, bidding wars have gotten so bad that single-family homes are selling for $4-5 million in certain neighbourhoods. And in the uber-competitive Toronto market, people are paying 500 dollars for a home inspection without even moving in; they’ve ultimately been outbid on their offer, sometimes by as much as$135-thousand over the asking price.

Frustration around this lack of affordable housing has led one Vancouverite to start a hashtag on Twitter,#donthave1million, in reference to the average price of a home in that city. This hashtag has become somewhat of a rallying cry for well-educated, well-employed, would-be homeowners who simply can’t afford to take on such massive mortgage debt. There is even a website,, which offers discounted real-estate services for those who apply online.

Mind you, it’s not the cost of a realtor holding people back, but the price of real estate itself. And renters are struggling with the rising cost of living, too. In 2014, the average rent for a two-bedroom apartment in Vancouver was $1,600 a month. And there weren’t very many available, with a vacancy rate of 0.5 per cent. For families in Toronto, finding an affordable apartment with enough space for three kids has been “kind of impossible.”

So, what can you do when skyrocketing housing prices come with levels of mortgage debt you probably can’t afford? On the West Coast, one option is to move into a mansion. In Vancouver, five friends (and their families) moved into a 6,000 square-foot, five-bedroom home, where one resident pays just $850 a month—including utilities! There are roughly 150 such living arrangements in the city, but residents still have to deal with high heating costs, insurance coverage concerns, and the fact that the absentee millionaire homeowner could choose to sell at any time.

It would be nice if we could all just escape to the countryside—even moving from Vancouver to Victoriacould address debt problems by reducing your rent up to 30 per cent. But the reality is that most large companies are based in large cities, which means that many Canadians must live within commuting distance. For a young worker in Toronto or Vancouver, the old adage about keeping rent at no more than 30 per cent of your monthly budget doesn’t always apply.

But spending more on rent requires having the discipline to spend less in other areas so you don’t go into debt. As much as you might like to check out that hot new restaurant, you’d be better off trying to recreate recipes at home. (Some popular franchises even sell their own cookbooks.) Or when dining out with friends, you might have to order the salad instead of the steak.

You might feel like you’re missing out at the time, but consider yourself lucky in the long run. Right now, the average Canadian has debt problems, owing $1.63  for every dollar they earn. By being disciplined in your spending and savings habits, you’re getting ahead of the game, which should help you make a larger down payment and reduce your mortgage debt when you buy a house.

How are you coping with the rising cost of housing? Share your thoughts with BDO by joining the conversation on Twitter using #LetsTalkDebt