Unaffordable housing is the primary reason most Canadians who co-own their homes are buying the properties in partnerships with parents, friends or colleagues, a survey commissioned by Royal LePage found.

Across its network of realtors, the Toronto-based company found evidence co-ownership is on the rise. Twenty-three per cent of real estate professionals said they saw somewhat of an increase in co-ownership and eight per cent saw a notable increase.

The report says six per cent of Canadian homeowners are co-owners.

A little over three-fourths of Canadian co-owners participating in the survey cited affordability concerns behind their decision.

Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., said in an interview with RENX Homes co-ownership is a rising trend, with the six per cent figure representing a “sizeable amount” of the market.

As demographics for the average Canadian household change and housing affordability remains a serious problem, Yolevski said co-ownership could become more popular – either as a necessity or preferred system.

Affordability and interest rate hikes

Economics are the main reason why Canadians are opting for co-ownership. Yolevski said interest rate hikes, tightened mortgage qualification requirements, shrinking housing supply and rising property prices combine to create challenges for potential buyers, motivating them to give co-owning a look.

Thirty-two per cent of respondents said rising interest rates since March 2022 were a factor in co-owning property, with most affirmative responses coming from younger age groups.

Nearly half said they co-owned because they would not have been able to do it on their own. Thirty-eight per cent said co-owning enabled them to live in a larger property or in a more desirable neighbourhood.

A plurality of respondents (44 per cent) lives with their co-owner, while 28 per cent do not. A minority — six per cent — said they co-own as an investment or recreational property.

Co-owning was most pronounced in the 18-to-24 (81 per cent), 25-to-34 (83 per cent) and 45-to-54 (81 per cent) brackets. As the numbers are skewed to younger generations, Yolevski said it suggests parents are assisting their children financially, grandparents are caring for their grandchildren, or grandparents are being cared for.

Changing households also a driver

Household demographics are also shifting.

Canadians are living longer, and delaying marriage and the age they move out of their parents’ home. These factors are driving multi-generational co-ownership over the nuclear family.

“We’ve seen that in the past, but again, given the affordability crunch, we are seeing it more and more,” Yolevski noted.

Of co-owning Canadians, 89 per cent said they co-own with family members. Seven per cent co-own with friends and eight per cent with someone who is not a family member or friend.

Multi-generational families could benefit from this arrangement.

Thirty per cent said they co-own because they needed child care or elderly care. Grandparents living with their children and grandchildren can be involved in child care, while adults can take care of their elderly parents. Some families may simply prefer the set-up.

Impact on developers, financers and brokers

Close to two-thirds (65 per cent) of all co-owners said they co-own a single-family detached home, with 19 per cent sharing an attached home (like a townhouse or semi-detached home) and 13 per cent sharing a condominium or apartment.

The demand for larger properties or neighbourhoods makes sense to Yolevski. As multi-generational homes are a factor behind co-owning, it allows for families to better support child care or elderly care.

“The single-family detached home is already a desirable product, so I don’t think we are going to see pressure come off of that,” she said.

If co-owning continues, Yolevski anticipates higher demand for single-family detached homes. First-time buyers are more interested in condos or apartments for their relative affordability.

On the mortgage and financing side, co-owning will likely require some adjustment.

Yolevski said lenders are unlikely to actively push requests for co-ownership, and they will have to deal with more complex paperwork and information gathering. But with more people signing a mortgage, it may also increase the likelihood of qualifying for financing because there are more people to take on the responsibility.

Banks will have to be ready for more co-ownership the longer housing unaffordability remains an issue, Yolevski said.

If you are exploring co-owning, Yolevski has a piece of advice no matter whom you are partnering with: seek legal counsel in advance to set financial obligations before the pen hits the purchase contract.