Nearly a third of Canadians are considering buying a home with others, renting out a secondary unit and other “non-traditional” paths to ownership amid ongoing affordability barriers in the housing market, a new poll released Thursday suggests.
Re/Max Canada published the results of a poll conducted by Leger in late 2023 that surveyed Canadians on their appetites to buy a home if it meant forgoing single ownership or buying with a spouse or partner.
According to the findings published Tuesday, some 32 per cent of respondents said they are exploring so-called “non-traditional” ways of entering the ownership market due to the affordability crisis. That compares to 13 per cent of current homeowners surveyed who said they used alternative methods to buy a home.
For those considering a non-traditional purchase, the most popular paths were listed as rent-to-own models (22 per cent) and co-owning with a family member who’s not a spouse (21 per cent). Also included in that category was owning a home with plans to rent out a portion of the property (17 per cent).
Re/Max Canada president Chris Alexander told Global News in an interview that the interest in alternative paths to homeownership reflect a continued belief in the value of real estate, despite well-documented affordability challenges over the past few years.
Some 73 per cent of respondents said they still believed home ownership was the “best investment they can make” – on par with a similar study a year earlier. Alexander noted that comes despite a housing correction tied to higher interest rates that saw values drop in most Canadian markets over that year.
“Despite all of the challenges — interest rates, the economy, negative headlines, all of that — there’s still a desire to own real estate and Canadians are getting creative more and more to achieve that dream of homeownership,” he told Global News.
“Personally, I’m really encouraged by it. I think most Canadians still see real estate as a solid long-term investment, and the fact that they’re buying with friends, renting to own, fractional ownership, just speaks to that overlying desire for homeownership here.”
Demographically, homeowners were more likely to have bought their property with a non-traditional method if they were aged 18-34 (25 per cent) or identified as a member of a BIPOC community (27 per cent). These cohorts also indicated in the survey that they were more likely to be considering alternative paths to homeownership in the future, in addition to households with young children.
According to Re/Max, realtors in cities across Canada pointed to increases in immigration and a desire for extra cash flow as sparking growing interest in properties with secondary suites.
Financial news and insights
delivered to your email every Saturday.
Real estate agents in western Canadians cities including Edmonton and Winnipeg, as well as Ontario markets such as Brampton and Mississauga, indicated as part of the study that they are increasingly searching for properties that can accommodate intergenerational families of newcomers.
In many cultures, having multiple generations of family under one roof is not a new phenomenon. But whether Canadian newcomers opt for these living styles by choice or necessity, Alexander said that the reality is that affordable housing is no longer a selling point for migrating to the country.
A National Bank of Canada report last week said housing affordability nearly hit its worst levels since the 1980s in the fourth quarter of 2023, thanks to still-high borrowing costs, rising rents and an uptick in home prices.
“Even just 10 years ago, people would come to Canada in search of an easier life, more affordable, more options for resources and schools and health care,” Alexander said. “Now, unfortunately, people come here and it’s very expensive, especially rent and real estate.”
Buyers in more expensive markets such as Vancouver and Victoria in British Columbia are also showing a growing interest in secondary units, but Re/Max said realtors in those cities are emphasizing the value of extra income to mitigate higher mortgage costs as driving that activity.
London, Ont., is seeing an uptick in interest in intergenerational family units as a way to help with childcare and other household expenses, according to Re/Max.
Secondary units can be especially attractive in periods of economic turbulence, Alexander said.
Even if their value rises over time, he said homes can start to feel like a liability, sinking money into maintenance, property taxes and rising mortgage costs. But rental income from a tenant, or shared costs via co-ownership, can either generate positive cash flow or help lift the burden of monthly carrying costs, he said.
“That’s appealing for a lot of people,” he said. “Rising costs — groceries and gas and taxes — all of those things have gone up tremendously over the last three years. I think people are just trying to find ways to make it work.”
A separate study from Royal LePage in August 2023 also indicated that real estate agents have seen an uptick in interest for co-ownership arrangements since the COVID-19 pandemic set in. Most who were buying with someone other than a spouse or partner said affordability was driving the purchase.
While he expects the country’s most expensive housing markets in Ontario and B.C. will see alternative ownership methods “gain traction,” Alexander says cities where buyers can still afford the more straightforward purchase will likely favour that route.
But he also said that combining resources to finance a real estate purchase is not an entirely new phenomenon, it’s just now coming to the residential sector. Commercial and multi-unit developments have long been paid for by investors coming together to fund a build or acquisition.
“This method of pooling resources has been around forever,” he said. “And it’s just encouraging to see it trickle down to entry-level price points as well.”
The Re/Max Canada report is based on an online survey of 1,522 Canadians completed between January 19 and January 22, 2024, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size (1,522) would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.
© 2024 Global News, a division of Corus Entertainment Inc.