Co-ownership A Popular Approach For First Time Home Buyers

Perhaps it’s nothing new, but nowadays, many parents and grandparents are co-signing their first-time buyer offspring’s mortgages. In addition, an increasing number of purchasers are co-buying to be able to afford to get into the market. With the average price of a home in the Greater Toronto Area topping $1 million, co-ownership with family or friends offers an opportunity to get a foot in the door and earn equity over time.

Recently, Statistics Canada published a report that concluded more than one-quarter of homes in Toronto owned by people born in the 1990s are co-owned with parents. Looking across the country, there has been a 17.3 percent rise in that statistic, and Toronto’s co-ownership rate jumped to 27.2 percent.

In addition, a University of Toronto School of Cities report issued in February of this year shows that more people are co-purchasing single-family homes and redeveloping them into multiple dwellings, so each co-purchaser owns a separate entity. The report (https://bit.ly/3JVM2LO) also mentions the complexities and red tape involved in co-owning multiple units on a single lot and suggests governmental policy changes to make this process easier. The co-purchasing trend extends to condominiums where large suites are available.

Aside from co-ownership, older family members have often loaned or given their children money toward down payments. Even decades ago, when homes and condominiums cost a fraction of what they are priced at today, it was a challenge to come up with the deposit. For many families, this was a way of passing along some of the wealth parents had earned during their working years to help their children immediately rather than later in their wills. Passing along wealth can also take the shape of parents right-sizing to more compact dwellings such as condominiums and sharing some of the equity they have earned over the years with their grown children.

Whether it be via co-signing for a mortgage or a loan, offering an outright gift, or co-purchasing a home or condominium, these financial avenues are a welcome relief for first-time buyers nowadays.