Where in the World Can We Afford to Live?
The government probably can't help you with the cost of living crisis. You may be able to help yourself.
We've all thought about it, especially since the start of the COVID-19 pandemic. Those digital influencers posting pictures and videos of their glorious lifestyle, carried out in fabulous destinations around the world, from the Azores Islands to Chiang Mai. For some unspecified price, EVEN YOU could live just like that...if only you would buy their course.
I live in Toronto, Canada, known internationally for unmatched diversity, lovely people, abysmal traffic, and an eye-watering cost of living. Since getting married in 2021, I have been daydreaming about one day having a family. However, those daydreams are often interrupted by articles like this one, which make it seem like I need to make the top 30 under 30 before that can happen.
Yeah WTF Happened to the Cities Anyway to Cause this?
A whole variety of reasons, each of which could frankly be their own article. The case study here is Toronto, but the theme is mostly the same in all the world's top cities. Some of them include:
Modernist Urban Planning
Basically the idea that giant roads in the middle of cities with lots of cars are awesome (land for building/walking must be sacrificed).
Outdated/poorly designed zoning laws
70% of the residential land in Toronto is used for single family homes (because who cares about walkability right?). Similar rules apply to many of the most expensive cities.
Hugely Increased Volumes of Immigration With Zero Coordination Between Levels of Government
This one is more Canada specific because immigration intakes have doubled in the last 5 years from about 250,000 a year to about 500,000 a year (most of whom were qualified to buy property in major cities at that time). The same is true of any place where for some reason everyone wants to live at the same time.
These increases could have been planned years in advance as a matter of national policy. Provinces could have been asked to relax their permitting restraints on building, cities could have arranged for more transit to avoid future congestion. None of this occurred.
Commodification
Investors in the city and around the world caught wind of how hot the market was and bought up huge tracts of real estate to drive prices up and keep them there for all the reasons mentioned.
Rough! What do I do about this!!?
There is an entire industry on the internet dedicated to helping you make more money - often styling itself as passive income and operating on the model of:
Offer mediocre free product to get your email —> use email marketing to target you with paid ads —> build a site to sell cheap products to people with bad spending habits.
I dislike that - despite the success that some people have with it I motion it’s scummy and wasteful.
Another way to solve this problem is to lower your housing expenses. The rest of this post is dedicated to showing how to do just that. There are many countries around the world that are cheaper than North America. Disclaimer: I am not an immigration consultant, so go see one if you decide to pursue this.
Let's start with Europe, a common target of the aforementioned digital nomads. The Iberian peninsula (geographically a combination of Portugal, Spain, and Andorra) has a significantly lower cost of living.
Let's look at a website called Numbeo (think Wikipedia but only for cost of living/purchasing power comparisons).
Just buying food in Madrid is between 25%-177% cheaper than in Toronto (that means some food items in Toronto are almost 4x the price). Real estate, as well as Central Madrid apartments, cost almost 50% less than in Toronto. In the suburbs, it’s about 25% of the cost.
The same is true for everything from clothing to childcare, sports/leisure, etc. And don't forget that this is the middle of one of the EU's major economic hubs. The story is the same for Portugal, but it's even cheaper.
Let's look at Asia. In Chiang Mai (let’s not forget it already has a huge population of Global North expatriates), everything except gym memberships is between 20-94% cheaper than in Toronto.
Even in the Americas, if you want to stay a little closer to home, you can purchase a property in Costa Rica, one of the safest countries in the hemisphere as confirmed by the $1B Intel has invested over the last two decades. It also maintains the highest safety standards in the region and has many of the world’s most biodiverse forests. Th
That’s Nice but How Do I Get In?
Most countries, including Canada and the USA, have something called an Investor Visa. In brief, this means that if you make some type of investment in a country (such as opening a small business, buying real estate, or having a large sum of money in a national bank account), you may be eligible for a temporary residence permit that can later be converted into citizenship. For instance, buying a property worth more than €500,000 (about $700,000 CAD) anywhere in Spain gets you a temporary residence permit.
The island nation of St. Lucia offers full citizenship rights for less than $110,000 USD and does not charge income tax - ever.
There are other options available if you have some sort of pension or fixed income after you retire. Marrying someone with a second citizenship typically grants you priority access to that citizenship as well.
Why is This Something I Care About?
Possibly, you don't. If you make over $100,000 a year, are fine with a two-bedroom apartment, and have no plans to start a family, this is the only way to afford a comfortable apartment in a city like Toronto on your own. However, if you want more space, something approximating the inside of a house, you'll need a combined household income of over $200,000 CAD + 25% to begin to qualify for any mortgage.
While this is feasible for some, it isn't for most people before at least 30. Even if it is feasible, one needs to ask if it's a reasonable financial decision to use that amount of money on housing.
The vast majority of people will be tied to their mortgages under these conditions for 25-30 years, significantly limiting their options to invest in other things during that period. It drastically increases the risk of leaving a job you don't like, leaves you with less capital to self-fund a business, restricts your financial freedom, and causes untold stress for the adults who have to deal with it. Money is a significant factor in why marriages dissolve.
This all Seems Way to Complicated, is There Anyone Who Can Help?
Every country has specialized immigration lawyers that will help you to understand the requirements and the type of visas that best fulfill your needs. Are you an investor that wants to work remotely? Do you want to be employed in your target country? Are you a student? These are all very different visas with different requirements, freedoms, and restrictions and it’s best to seek professional help before deciding what makes sense for you.
Final Thoughts.
Not very long ago, this was something that only made sense for business magnates, entrepreneurs, and retirees. It made far more sense for the average working-age person, especially younger people, to stay in place, find a good job, and move up their city's real estate ladder. For many of us, this is no longer feasible or even desirable. We are quite literally faced with the option of earning $75,000 to $100,000 a year for a $2,000,000 house or $45,000 to $65,000 for a house that can cost as little as you want, depending on the tradeoffs you're willing to make. Yes, this does often mean learning another language. Would you have finished high school French if they paid you $1,000,000? Yeah, me too.
I hope this has been as valuable to you as it was for me when I first learned about it.
Sincerely,
James R. Davies