Home Hacks

You may need to earn $418,000 to buy in NYC—here are 5 ways to save on housing

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The cost of buying a home is on the rise. In the last 10 years alone, prices have increased in almost every major U.S. city, according to home investment company Unison's 2018 Home Affordability Report.

In New York City, prospective buyers may need to earn an annual salary of $418,482 to afford a place, given a 10 percent down payment. Even in more affordable cities, such as Portland, Oregon, residents need to earn $107,692 per year to afford to buy, according to Unison.

But for those willing to get inventive, there are numerous ways to significantly decrease on your housing expenses. CNBC Make It rounded up five innovative ways to cut back, from living in a trailer to biking to work.

Of course, some hacks aren't for everyone. But here's to being creative.

Choose an unconventional lifestyle

About two years ago, self-made millionaire James Altucher decided to leave his two apartments and get rid of everything he owned except for one bag containing two-to-three outfits and a second with a computer, phone and Kindle. He now lives exclusively in Airbnbs.

By divesting himself of his belongings, Altucher says he's more focused on doing his best work and being creative. "I miss some things that I used to love, but I also gain things which are more intangible, which is an enormous sense or feeling of freedom for me and creativity," he says.

Set a budget that's lower than you can afford

When setting your housing budget, calculate how much you can afford — and then lower it. Even if you can technically scrape by on a higher budget, choosing only to consider places that are manageable will allow you more freedom and flexibility, as CNBC senior editor Ester Bloom learned.

Bloom and her husband chose to stick to a modest budget when buying their first home, and that enabled them to take chances at work that ended up making them happier.

"If we had opted for the mortgage we could, technically, have afforded back in 2011, both of us would have been stuck in both personal and professional ways, weighed down and held in place by the responsibility of owning an expensive home," she writes. "Neither of us would have been able to take the initial risks that led us to more fulfilling careers."

Try a trailer

Despite Zappos' CEO Tony Hsieh's status as a near-billionaire — he has at least $780 million to his name — he chooses to live in a 240-square-foot Airstream trailer that costs him less than $1,000 per month.

Not only is the choice cost-effective, it also serves as a means of enhancing his creativity and living out the open, community-like culture he built at Zappos, where "create fun and a little weirdness" is the office mantra.

Tony Hsieh, CEO of Zappos.com
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Tony Hsieh, CEO of Zappos.com

Move outside the city

Andrew Hallam became a self-made millionaire on a teacher's salary by living frugally and investing every spare penny. In order to reduce his housing costs as much as possible, he was willing to go the distance — literally.

Hallam spent his first year as a teacher house-sitting to avoid paying rent. When he did end up settling into his own place during his second year on the job, the rent was cheap for a reason. His apartment was located in Campbell River, British Columbia, about 34 miles (55 kilometers) from the school where he worked.

Unwilling to waste money on gas, Hallam biked, choosing to shower and shave in the teachers' room at school each morning.

Be open-minded

Giving up your dream neighborhood for a more affordable one lets you search for all the other amenities you want without breaking your budget. In fact, the biggest mistake first-time home buyers make is not keeping an open mind, says Cathy Derus, CPA and founder of Brightwater Financial.

"Work with your realtor," Derus tells CNBC Make It. "They might have some suggestions of other areas that might have that similar feel to what you're going for. Some lesser-known areas still might meet your earlier requirements, [but] might be a little bit more affordable."

Whether you're renting or buying, not tying yourself down to a particular trendy place will give you the freedom to jump on the best deal.

This is an updated version of a previously published article.

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