There has to be more to solving Canada’s housing affordability crisis than building more houses.
We need practical measures that work right now, not over the years required to plan and build new condos, townhomes and houses. I’ve written before about multigeneration housing, where different generations of a family live together. Another thought is homesharing, where people rent out unused bedrooms in their home and share amenities like the kitchen and yard.
To find out more about this, I invited the co-founders of the homesharing platform Sparrow to do a newsletter Q&A. Here’s a version of my exchange with Oren Singer and Gavin Servai:
Q: Oren and Gavin, can you tell us a little about Sparrow?
A: The Sparrow platform connects Canadians with spare bedrooms to those looking for accommodation for a minimum of two months. We enable hosts to generate passive income and build social connections by renting out unused space in their homes, and renters to benefit from access to housing that is typically below market rates.
Q: Describe the kind of rentals people are posting on Sparrow, and how they compare to the broader rental market? What parts of the country do you serve?
A: At Sparrow, our listings typically involve homeowners renting out spare bedrooms or basements in their residences. These accommodations are offered with a minimum stay of two months up to 12 months or more. Unlike traditional rental offerings, Sparrow emphasizes affordability, community connection, and shared living experiences. A key aspect of our listings is that they include utilities, allowing housemates to get easily settled in. Additionally, our rentals provide more than just a room; they include access to shared amenities within the home. Our platform has a concentrated presence in the Greater Toronto Area and the Greater Vancouver Area.
Q: What’s the average cost of rentals on Sparrow, and how do they compare?
A: Sparrow’s average room rental, typically furnished and inclusive of utilities and with access to home amenities, is about $875 per month. In Ontario and British Columbia, where Sparrow primarily operates, this represents a significant saving. In comparison, the average one-bedroom in Ontario is $2,283, and in British Columbia, it’s $2,369. Comparing Sparrow’s $875 monthly rental cost to the average cost of splitting a 2-bedroom apartment in Ontario and B.C., Sparrow’s renters save approximately roughly 40 per cent.
Q: How many empty bedrooms have been filled so far by landlords and renters using Sparrow?
A: We’re just surpassing our 400th match on Sparrow.
Q: How does Sparrow make money?
A: Hosts pay a matching fee that ranges from a quarter of a month’s rent for short-term agreements, to a full month’s rent for longer-term agreements. Renters pay a monthly platform fee equal to 5 per cent of the monthly rent in exchange for matching, screening, lease signing, credit score building, and ongoing support.
Q: Can you give us a profile of the typical landlord using Sparrow, and the typical renter?
A: The typical Sparrow host is a homeowner, often with one to two spare rooms or a basement, looking to supplement their income in response to the escalating cost of living. Many are facing increased mortgage payments, rising food costs, and other financial pressures, and find that renting out their unused space is a practical solution. On the housemate side, Sparrow attracts a diverse group comprising students, newcomers to Canada, and young professionals. These individuals are in search of quality, affordable living spaces that fit their budgets while offering a sense of community and belonging. Our platform serves as a bridge, connecting these two groups and facilitating mutually beneficial living arrangements.
Q: How long do Sparrow tenants typically stay in their rentals, and do they have to sign a lease?
A: On average, tenants stay in Sparrow rentals for about eight months. When signing up, both hosts and housemates specify their preferred rental durations, and our matching system takes these preferences into consideration, along with other pieces of information. This approach promotes a compatible arrangement for both parties, as it aligns expectations right from the start. All agreements are formalized through a contract, providing security and clarity for the duration of the homesharing experience.
Q: Are there enough people willing to rent out a bedroom to make a meaningful dent in our rental supply problem?
A: Absolutely. We need roughly 3.5 million units to close the supply gap by 2030. With millions of spare bedrooms across Canada, and many homeowners struggling to meet mortgage obligations, homesharing presents an excellent win-win for homeowners and renters alike.
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Rob’s personal finance reading list
Are we at a tipping point for tipping?
A look at how tipping expectations at restaurants, bars and coffee shops have soared in recent years, and how people are responding. You read in my Tuesday newsletter about a way to push back against big tipping demands programmed into payment terminals – use cash.
Here’s what $400,000 gets you in the housing market
A look at how price per square foot differs in the housing market from big cities to smaller locations, using Ontario as an example. Check out how little Toronto gives you for the dollar compared with the suburbs.
Their retirement plan was their house
A financial planning case study of a couple who felt good about their financial position because they paid off their mortgage by the time they turned 60, and because their home has risen in value. The lesson here is that they should have used the money they saved by not making mortgage payments to build assets for retirement.
Secret Toronto
If you live there, or if you visit …insider tips for finding the cheapest and tastiest in food and more.
Ask Rob
Q: Several recent articles predict a Bank of Canada interest rate cut. Any bond ETF suggestions?
A: My suggestion would be a diversified, or aggregate, bond exchange-traded fund that holds government and corporate bonds maturing in the short, medium and long term. Bond ETFs like this have already started to rise in anticipation of a Bank of Canada rate cut, which is expected in the first half of next year. Here’s the bond instalment of the 2023 Globe and Mail ETF Buyer’s Guide. I’ll update the guide in the first quarter of 2024.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools, Explainers, Guides and Charts
Tips for protecting your private data on various internet-connected devices from the Canadian Bankers Association and the federal government. Timely, given that electronics are a big gift theme at this time of year.
The Money-Free Zone
A fantastic book about the 60s folk music scene is Positively Fourth Street, by David Hajdu. It focuses on Bob Dylan, Joan Baez and a cast of other characters that includes the talented but now forgotten Richard and Mimi Farina. Here’s a rocking little number by the Farinas called Reno Nevada.
On social media
What is the going rate from the tooth fairy when a child loses a tooth?
In case you missed these Globe and Mail personal finance-related stories
– Are incomes rising over time? Why working-age Canadians need government help, not seniors
– Food isn’t getting any cheaper in 2024. Here are some ways to eat healthy on a budget
– How to profit from the new bond bull market
Announcement
This is the last Carrick on Money newsletter of 2023. Happy holidays to all. See you in January.
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
