Alternative paths to homeownership: Why more Canadians are exploring non-traditional ways to buy a home

We’ve all heard the saying that necessity is the mother of invention. Given Canada’s skyrocketing real estate values, it’s little wonder that more Canadians are exploring alternative forms of homeownership that put affordability front and center, and make it possible for many people who might otherwise be locked out of the housing market to be able to buy a home of their own.

What are alternative forms of homeownership?

When most people think about buying a home, the idea that comes instantly to mind is the traditional, single-owner model that generations of Canadians have come to rely on. But with property values rising to record levels over the last few years, Canadians of all ages have also begun to look at a number of innovative, non-traditional paths to homeownership.

According to a recent survey by Leger Marketing, up to 50 per cent of all Canadians have either used, considered, or would consider using a non-traditional method of buying a home. While “non-traditional” can mean different things to different people, some of the more common methods of alternative homeownership include:

• Co-ownership: buying a home with one or more other buyers (often a friend or family member) to afford a larger or better-located property.

• Multi-generational family ownership: pooling resources with parents, grandparents or adult children to allow multiple generations to live together under one roof, and share both household expenses and chores like cleaning, cooking and childcare.

• Rent-to-own: renting a home where the tenant has the option to buy the property within an agreed-upon timeframe, often using part of their rent as a down payment.

• Shared equity: exchanging a share of the equity of a property in return for a loan from the owner or developer to be put towards the down payment.

• Renting out a secondary unit: buying a home with extra space and either converting part of the home or adding a laneway house or secondary suite that can be rented out to help offset the monthly mortgage costs.

• Housing co-ops: taking on an active role in the upkeep, maintenance and management of a housing co-operative in return for a lower purchase price.

Deciding which option is right for you

Alternative homeownership is especially popular with younger buyers, newcomers to Canada, multi-generational families, and first-time buyers who are trying to get a foothold in today’s hot housing market. It also tends to be more common in places like the Lower Mainland, where affordability is a major obstacle for many people who want to become homeowners.

But while alternative forms of ownership can be a good option, they also add several extra layers of risk and complexity to the homebuying process. So if you’re considering an alternative path to ownership, be sure to get some reliable professional advice first.

Reach out to your REALTOR®, or contact us to set up a free call or coffee to see if we can answer your questions, and find out if non-traditional ownership might be a good fit for you.