Rising borrowing costs are causing numerous prospective Canadian homebuyers to reconsider their immediate plans. A recent survey from Zoocasa, involving over 1,600 of its readers, revealed that 67% of Millennial participants postponed their home buying decisions, largely due to escalating interest rates. However, 65.9% still expressed a desire to purchase a home soon, suggesting the aspiration for homeownership remains intact, but the path may be evolving.

For older generations, the initial home might have been the ultimate or they might have started small, upgrading over time using their equity. Nowadays, the journey to homeownership might involve more stages, yet remains achievable. Realty agent, Kristi Newman, shared insights on the emerging trend of co-ownership as a potential solution for aspiring homeowners. She elaborated, “If your dream home seems out of reach currently, your plan might involve multiple phases. Co-ownership is gaining traction because many find it challenging to penetrate the market, particularly in places like the Greater Toronto Area (GTA).”

Co-ownership isn’t about merely sharing living space; it involves two or more parties merging funds to acquire a property, often with designated units or shared amenities. Newman remarked, “Given the benefits of countering inflation and building equity, it’s an avenue worth serious consideration. By entering the market sooner, many find they can secure properties beyond their solo financial reach.”

A troubling trend from Statistics Canada reveals that homeownership rates for Millennials are declining. Between 2011 and 2021, ownership rates for those aged 25-29 fell from 44.1% to 36.5%. For the 30-34 age bracket, the rate decreased from 59.2% to 52.3%. These figures are significantly lower than the 72.8% and 74.6% rates for age groups 50-54 and 55-59, respectively. Given the inflation and persistent high property prices, co-ownership may offer Millennials a viable route to accumulate equity for future solo purchases.

Newman emphasized the investment angle, “Your home should be seen as a financial asset. Retaining a co-owned property for 3-5 years before selling can position you for an upgrade.” On choosing a co-buyer, she imagines an app to connect like-minded purchasers. Viewing it as a business venture, she advises legal counsel for creating a fair agreement that accounts for unforeseen circumstances. Collaboration with a seasoned mortgage broker and a realtor familiar with such setups is key. Furthermore, she suggests co-owning for 3-5 years, leveraging the equity either to upscale or enter another co-ownership.

She concluded, “Occasionally, slowing down paves the way to accelerate. Co-owning for a few years can significantly enhance your wealth-building pace.” If you’re contemplating a housing transition this season, be it solo or co-owned, let us guide you. Get in touch for expert advice on both buying and selling properties.