Alternative Housing Options For Combating Rising Housing Costs

Society expects a traditional, linear path — one riddled with debt and high-interest loans. Work hard in high school, go to college, buy a new car, get married, buy a house, have kids, get that corner office… does this sound familiar to you?

While you may have been able to accomplish all of this with little to no debt “back in the day,” (think white, middle-class, 1960s) the same is simply not possible in 2022.

The rich are getting richer, the poor are getting poorer, and the middle class is shrinking. This is especially true when it comes to housing. 

Since the beginning of the Coronavirus pandemic, the change in median home list price grew 12-48%. Freddie Mac reported that the average 30-year fixed mortgage rate hit 4.67%. To make matters worse, the Federal Reserve has begun passing around the dreaded “B-word.” 

The rental market is no less chaotic, with renters facing price increases up to 40% in some cities. In 2021, the cost of rent was 10% higher than in 2020. Rent growth is expected to reach about 7.1% in 2022.

With all of this in mind, I have compiled a list of housing alternatives for you to consider as you combat increasing costs of living no matter your homeownership status.

Downsize your housing

You’re probably paying for too much house. According to The Center on Everyday Lives of Families at the University of California, 68% of the family's time was largely spent in the kitchen/nook as well as the family room, typically near the television. 

Guess what? You don’t need a 2,300 square foot house when you spend nearly 70% of your time in 2 rooms.

Sami, @asunnysideuplife, and her husband didn’t need to see this study to decide on downsizing their home to speed up their debt payoff journey. 

They transitioned from a sprawling 3,200 square foot mortgage to a modest 600 square foot rental house. With their 3 children, dog, and cat.

Downsizing their living space and their items allowed their family to hurry along their debt payoff journey and change their financial habits. Sami and Daniel went from half a million dollars in debt to a still-growing $400k+ net worth. They also were able to beef up their savings accounts, invest heavily, and cash-flow a few items they wanted.

Sami attributes some of this success to her dedication to minimalism and to ridding her family of an unsustainable housing situation and mortgage payment.

“This one decision people thought was crazy ended up being the best financial decision we’ve ever made. Our family thrives in a smaller space. It’s less to clean and less to pay for — which means more time and money for hobbies, resting, and the outdoors.” 

Consider multi-generational housing

The joke of living in Mom’s basement doesn’t hit like it used to, as more and more young professionals and families are choosing to stay under their families’ roofs in a permanent living arrangement.

This old tradition, still normal in some cultures - meant to keep generational financial struggles away, help aging family members, and ensure companionship - is making a comeback. In fact, in 2018, 10% of U.S. children lived in a multigenerational household, a return to levels last observed in 1950. 

What once meant you didn’t have your shit together or weren’t successful is becoming a way to survive — especially for the sandwich generation, or those who are parenting small children while also parenting their parents into their senior stages of life. Instead of an indication of intelligence or wealth, it's become an indicator of our times: rising costs of living, lack of affordable housing, crippling student loan debt, and record-setting inflation. 

Kealy, @sustainablefinances, is now part of that statistic.

“My husband and I decided to move in with my in-laws for a variety of reasons, but the biggest reason was to save money. Moving in with them will help us save $5,000 per year by taking our daughter out of private school and we will be able to use our home as passive income for renters.”

While living with (and tolerating) your family may not be an option for you, it is something to seriously consider in order to save money. Kealy also states, “By living with the “rents”, it will help strengthen our family unit when welcoming our son this summer.”

Make room for roommates

I’ve lived with roommates for the vast majority of my adult life. It wasn’t until recently that my husband and I began living alone.

Having roommates, especially in high cost of living areas, is almost essential for lowering living costs and being able to afford other things that are a priority in your life.

If you have the extra room, I’d highly recommend it — especially if you cannot afford a home and renting is your only option.

According to a 2018 Pew Research Center study, nearly 1 in 3 U.S. adults live with at least one adult roommate. Amanda, @debtfreepanda, was one of those adults.

Her husband’s best friend moved in with them, paying $500 per month. Amanda’s family was able to save his rent money into a savings account.

She also says he respected their privacy, offered to contribute to other household bills and chores, and even helped her brainstorm for new product ideas. His grilling skills also didn’t hurt. 

I’ve also experienced the joy of roommates. I loved having company, sharing expenses, and splitting responsibilities in the household. With the money that I collected from renting my friends extra rooms in my home, I was able to save money and pay off debt. 

With roommates I shared space with in an apartment, I’ve been able to afford much nicer homes, in safer areas, with the ability to share costs in a way I normally wouldn’t be able to.

“Living with my husband's friend was an overall positive experience. I’m glad we were able to help him settle into a new city and it’s nice to have some extra money sitting in our savings! I don’t think we’d open our home to a stranger, but definitely with a friend if the situation arises.”

Of course, there are downsides to sharing your space, and even considering roommates should be taken seriously. I don’t recommend coexisting in the same space as someone who is not in the same place in life as you are or doesn’t share the same priorities in their home.

Proceed with caution.

There’s nothing wrong with traditional housing situations. If you are, however, looking for an alternative to save money or put more intention on other areas of your life, consider looking outside of the box.