Royal LePage executive shares the reasons, responsibilities, and benefits of buying a home with others
Buying a home in Canada today is beyond the means of many individuals, but teaming up with friends or family members is a popular solution.
A new report from Royal LePage shows that co-ownership of Canadian homes is being driven by affordability challenges in many major markets with 32% of respondents citing interest rate hikes as a key factor in their collaboration.
Of those who own a home with someone other than their spouse or significant other, 89% do so with family members while 7% have teamed up with friends, and 8% have bought with someone who is not a friend or family member.
Many of the co-owners live together in the home (44%) while 28% co-own but do not cohabitate, and 6% said that none of the co-owners live in the property which has been bought for investment or recreational purposes.
"Different generations of families living under one roof is not a new phenomenon, but has been growing in popularity in recent years," said Karen Yolevski, COO, Royal LePage Real Estate Services. "Census data shows that multigenerational households are now the fastest growing household type in Canada. Households group together for many reasons, including communal care for elderly parents, help raising children, cultural preferences or simply to be together.”
Financial challenges
However, the decision to live together, including co-owning a home, is a decision increasingly made for financial reasons.
Three quarters of co-owners say that affordability was a major motivating factor in their decision to co-purchase their property, rising to 83% those aged 25 to 34, and 49% said they would not have been able to buy a home on their own.
“In an environment where home prices and interest rates have risen quickly and sharply, and where the threshold to qualify for a mortgage has become much more challenging, Canadians are pooling their resources and buying homes together,” added Yolevski. “In cases where homebuyers cannot afford to purchase on their own, they are combining their buying power with their parents, children, siblings or even friends."
Two thirds of survey respondents said they co-own a detached family home – a segment of the Canadian housing market that saw a rally in the second quarter - while 19% share an attached home such as a townhouse or semi-detached property, and 13% share a condominium/apartment.
"By dividing the cost of a home between more people, Canadians can not only get their foot on the property ladder more easily, but also expand their home search to more desirable locations or larger properties that may not have been accessible with their budget alone,” said Yolevski.
But it’s important that those considering co-ownership know what they are getting into.
"Opting to co-own with friends or family is not as simple as signing a piece of paper next to someone else's name – co-owning a home often comes with meaningful lifestyle changes, and requires in-depth conversations over financial, legal and personal obligations," said Yolevski. "Regardless of whether you live in the home with your fellow co-owners or not, the responsibilities of owning a home with other people are shared, but so are the benefits."
