Taking into account the astronomical heights that Canadian home prices have reached in the past few years, pooling one’s resources with those of a few trusted confederates to purchase a home together now appears to be a sensible option.
In an August 19 contribution piece for the Toronto Sun
, Heathwood Homes president and Heron Group of Companies principal Hugh Heron argued that co-buying residential properties have long helped families cope with the ever-increasing costs of owning homes.
“This form of coping with the financial realities of owning a home isn’t new,” Heron wrote. “For example, in Brampton, many new homes have direct access to the basement from outside. Multi-generational families purchasing together and sharing expenses makes sense.”
In the Greater Toronto Area alone, low-rise homes now go for around $887,543 apiece, while units in high-rises average $469,516 each. These eye-popping prices have made co-purchases practical, even among those who aren’t related by blood.
“The situation can also work when the people involved are friends instead of family, but it takes careful consideration. I heard two best-friend couples (each with a baby) on the radio talking about their experience co-buying and sharing a home in Toronto,” Heron stated. “They had a bit of a challenge getting a mortgage, but now that they are living in the low-rise home, they’re happy.”
“If they purchased separately, each couple would have been able to afford only a compact condominium suite. They wanted a backyard, too, which limited their choices to low-rise living.”
However, as with other investments, co-purchases made among friends need an unshakeable foundation of trust, communication, and clear expectations.
“In their case, they had been friends for 15 years,” Heron said. “Even with that long-standing friendship, they were meticulous about agreements regarding who uses what part of the house when.”
Heron noted that the emergence of this trend shouldn’t come as a surprise, and that the finance segment should now take this into consideration.
“Maybe this is the way of the future,” he mused. “Apparently, our banks are going to get even tougher on mortgage approvals, but to accommodate co-purchasers, financial institutions will have to get on board with creative ways to make it happen.”
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