Uncategorized Archives - Tammy Sharp, Team 3000 Realty Ltd., North Vancouver Real Estate

Multigenerational Home Buying: How to Find a Home That Fits Your Whole Family

By Tammy SharpUncategorizedNo Comments

For many homebuyers, multigenerational living used to be considered an option of last resort: it was a route families took only when they needed to ride out a financial storm or care for ailing family members. But that mindset is on the decline: A growing number of families now say that they are embracing multigenerational living and moving in together by choice.

In fact, the share of homes occupied by three or more generations or by cohabiting households has jumped 45% in the last 20 years, according to Statistics Canada. By the time the 2021 census was recorded, over half a million kids lived with both parents and grandparents.¹

Living with extended family has become especially popular in recent years as younger generations face higher home costs and seniors embrace aging in place. With average home prices continuing to outpace median incomes in Canada, first-time home buyers have become more open-minded about co-buying a home with friends or family.²

Indigenous and immigrant families are especially likely to embrace multigenerational living––often for cultural reasons.³ With multigenerational homes more common in other parts of the world, newcomers from those regions often prefer living with extended family, says Dr. Shimi Kang, a psychiatrist and parenting expert. “As Canada, in particular, is getting more multicultural, we see [multigenerational homes] are becoming a norm, not just for financial reasons.”⁴

For many families, the benefits are substantial, said Kang to HuffPost Canada. “Pooling finances, pooling childcare, pooling household responsibilities, having a support system built-in.”⁴ Plus, research shows that people who live in multigenerational homes are healthier and tend to live longer. They also enjoy more financial security.⁵

That’s not to say that multigenerational living is easy: It can also be stressful––especially if you choose a home that isn’t suited for a larger family. The key to making it work is to pick a home that can accommodate young and old alike without requiring you to sacrifice comfort or privacy.^{2, 6}

Here’s a closer look at multigenerational living, along with tips for finding a home that’s suitable for a diverse group.

WHAT TO CONSIDER BEFORE SHOPPING FOR A MULTIGENERATIONAL HOME

Before starting your house hunt, take the time to discuss your house plans as a family so that you’re all on the same page. Have you hashed out what you’re looking for in a new home? Can you agree on potential compromises? Are there any unaddressed concerns about the move?

You may also find it helpful to articulate your “why” for buying a multigenerational home and how each of you might benefit. For some families, multigenerational living is all about caring for relatives and sharing responsibilities. But for others, the goal is to pool resources so that you can purchase a more desirable property or cut down on expenses, like childcare or senior living.

For homeowner Jennifer Durocher, co-owning a home with her husband’s parents allowed them to live in a family-friendly neighbourhood that would have otherwise been out of reach. She and her husband had originally planned to buy their own home separately. “But it was difficult to come up with a substantial down payment,” said Durocher to Today’s Parent. Meanwhile, Dorucher’s in-laws were ready to downsize. By joining forces, both households saved money.⁶

Homeowner Surjit Singh says he immigrated to Canada in 2018 and bought a home with his extended family in 2021, just before inflation caused prices to surge. Owning one home helped the family cope, said Singh to the CBC. “Living together, you can share everything.”⁷

In addition to talking over your short-term wants and needs, you’ll also want to weigh long-term issues that could crop up in the future, like accessibility or money concerns. For example, if some family members are nearing retirement, accessibility issues (such as extra-steep stairs or a narrow hallway) could become a problem over time. Similarly, a more luxurious home with extra amenities like a pool may appeal to buyers who have gathered a lot of cash upfront, but it may also require a bigger long-term budget for maintenance and supplies.

If you haven’t had these discussions yet, set a date in your calendar so that you can talk it over as a group. We can help by interviewing family members individually and advising you on what you can realistically find in today’s housing market.

WHAT TO LOOK FOR IN A MULTIGENERATIONAL HOME

Once you’ve settled on what you want and need from a new home, your next step should be to jointly draft a budget so that you’ll know what you can afford. To ensure that no one in your family gets accidentally overextended, think holistically when planning your new housing budget and determine what you would need to buy the home––and maintain it.

In addition to budget, you’ll also want to consider a home’s size and what kind of layout you might need. In general, homes that offer ample space for solitude and privacy are thought to be more practical for multigenerational living––especially if there will also be young children.⁶

However, the ideal layout for your family and the amount of square footage you’ll need to be happy long-term will also depend, in part, on family members’ personalities. Some people don’t mind sharing a bathroom or having bedrooms situated close to one another. But others may find that they need something more separate to relax. Different housing options to consider include:

A large home with plenty of rooms and at least one or more ensuite bathrooms.
A home with an accessory dwelling unit (ADU), such as a basement apartment.
A multifamily unit, such as a duplex.

Architect Allison Holden-Pope recommends units with separate entrances if possible. That way, each generation feels like they’re living in their own space. “Having a sense of identity in your own place is still very important,” said Holden-Pope to Today’s Parent.⁶

For buyers looking to age in place, a home that offers a separate ground-floor unit, such as a garden home, could be the most comfortable (and the most practical) option. But if that’s not possible, then you may at least want to prioritize a first-floor bedroom and bathroom. Some families may also want to consider the needs of future caregivers, said Holden-Pope.⁶

Another possibility to consider would be a home you could add onto or retrofit into multiple units. Building a brand-new unit or renovating an existing space can be pricey. However, you may qualify for a Multigenerational Home Renovation Tax Credit to help offset your expenses.⁸

When visiting a property, we’ll help you weigh potential costs and estimate whether it’s a good investment. We can also connect you with a trusted contractor who specializes in renovations.

HOW TO BUY A MULTIGENERATIONAL HOME

Buying a home with family can be complicated––especially if you plan to jointly apply for a mortgage. However, depending on your financial resources, you may be surprised to find that it’s sometimes easier to qualify for certain mortgages as a group than if you tried to go it alone.⁹

You don’t necessarily have to split the mortgage evenly, either. A tenants-in-common mortgage allows you to customize the amount of property each family member owns. For example, one household member could assume responsibility for two-thirds of the mortgage, while another could pay for just one-third of the home.⁹

With a joint tenancy mortgage, by contrast, the mortgage is divided equally between co-borrowers and each borrower will be liable for the same amount.⁹

Talk it over with a mortgage lender or broker and ask for advice on what’s best for your situation. We’d be happy to connect you with a professional who understands the nuances of co-buying.

Your credit will also be an important factor in determining your mortgage qualifications and what you can buy, so have everyone check it as soon as possible. Pulling your credit report and score will not only tell you where you stand. It will also alert you to correctable issues with your credit, such as mistakes on your credit reports or too much debt on your cards.¹⁰

As you discuss your homebuying budget and strategy, jointly consider the following:

Who will be on the mortgage?
What about the title?
Would including everyone on the mortgage be beneficial for your mortgage rate?
For those who don’t qualify for the mortgage or have a lower credit score, can you make other arrangements so that they can still financially contribute?

Next, consider potential tax and estate planning implications of your home purchase, as well as worst-case scenarios. For example, if some family members want out of the arrangement, you’ll be required to refinance your home purchase, and you may not get as favourable a rate.⁹

To ensure you make an informed decision, it’s best to speak with a credentialed professional. Ask us for a referral to a legal professional or an accountant who can advise you.

BOTTOMLINE

Multigenerational home buying has grown more popular for a reason: it’s a great way to combine resources and buy a supportive home for more than just your immediate family. It can also be a smart lifestyle choice, helping reduce loneliness and promote health and well-being.⁵

If you’re wondering whether multigenerational living is right for you, call us for a consultation. We’d be happy to walk you through potential options and help you envision your own full house.

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources:

Statistics Canada –
https://www150.statcan.gc.ca/n1/daily-quotidien/220713/dq220713a-eng.htm
The Walrus –
https://thewalrus.ca/multigenerational-living-often-makes-sense-that-doesnt-make-it-easy/
Vanier Institute of the Family –
https://vanierinstitute.ca/resource/sharing-a-roof-multigenerational-homes-in-canada-2021-census-update/
HuffPost Canada –
https://www.huffpost.com/archive/ca/entry/three-generation-homes_ca_5cd4f84ce4b07bc729739712
SSM – Population Health –
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5769098/
Today’s Parent –
https://www.todaysparent.com/family/family-life/multi-generational-homes/
CBC –
https://www.cbc.ca/news/canada/british-columbia/canada-bc-multi-generational-housing-affordable-1.7134448
Realtor.ca –
https://www.realtor.ca/blog/understanding-canadas-multigenerational-home-renovation-tax-credit/30088/1362
The Globe and Mail –
https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-multi-generational-living-is-getting-more-common-heres-how-to-share/
Financial Consumer Agency of Canada –
https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score.html

November 1, 2024

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Mid-Year Market Update for 2024: What Buyers and Sellers Need to Know

By Tammy SharpUncategorizedNo Comments

Once again, the number one story in real estate this summer is mortgage rates. But unlike last year, when a surprise series of rate hikes from the Bank of Canada sent skittish buyers back to the sidelines, all signs now point to the opposite scenario. Instead of market-chilling rate hikes, economists now expect market-quickening rate cuts—possibly starting as soon as this month.¹

That means the housing market is likely to get interesting over the next few months. If fixed mortgage rates continue to drop in anticipation of a lower policy rate, more buyers are expected to show up looking for a deal before home prices take off in 2025 and 2026.²

Listings are also on the upswing and homeowners are feeling increasingly optimistic that their home values will rise over the next year, per a new Canada Mortgage and Housing Corporation (CMHC) study. So we could see more sellers-in-waiting regain the confidence to list their homes at strong but realistic prices.^3,4

With pent-up demand continuing to build, housing market activity could pick up significantly. As TD Bank Economist Rishi Sondhi noted in an interview with The Canadian Press, Canada’s housing market is “akin to a bit of a coiled spring.” Often when there’s a market-moving event like a rate cut, home sales and prices jump quickly.⁵

What does that mean for you? Read on for our take on this year’s most important real estate news and get a sneak peek into what analysts predict is around the corner for 2024.

MORTGAGE BORROWERS SHOULD FINALLY GET SOME RATE RELIEF

After more than a year of shifting forecasts and delays, it’s finally happening: the Bank of Canada’s first rate cut since 2020 is nearly here. The central bank is gearing up for two back-to-back meetings this summer to discuss monetary policy, plus three more meetings before year-end. Most experts think we’ll see our first rate cut as early as June 5 or in late July.⁶

But with inflation still elevated in the U.S. and the job market showing surprising gains here at home, the total number of rate cuts we’ll see in 2024 is anyone’s guess.⁶ Market watchers are nervously eyeing warmer-than-expected economic data from both sides of the border, with some now second-guessing whether rates will fall as much as hoped.^6,7 Previously, many economists thought federal rates would fall by at least a point this year.⁸

Sticky inflation down south is already putting pressure on bond yields, which help determine the fixed rates lenders charge.⁷ If the U.S. economy stays hotter than expected, the Bank of Canada may be forced to delay additional rate cuts, which could further impact mortgage rates.⁹

As Bank of Canada Governor Tiff Macklem cautioned, Canada’s central bank is ready and willing to cut rates before the U.S. Federal Reserve. But there’s “a limit” to how much faster they can go. If too much daylight exists between the countries’ key interest rates, that could weaken the Canadian dollar and further boost inflation.⁹

What does it mean for you? If Canadian homebuyers’ past behaviour is any indication, any drop in the Bank of Canada’s policy rate—even a delayed one—is likely to fuel enthusiasm and spark competition. But with lenders already pricing in the first rate cut expected this summer, it could be a while before fixed mortgage rates drop further. If you’re a buyer, ask us to refer you to a mortgage broker so you can lock in a competitive rate. It’s been a tough year for mortgage originations, so lenders are hungry for new business and may be more willing to cut you a deal.

PENT-UP DEMAND COULD SOON BURST INTO VIEW

With at least one quarter-point rate cut in the cards and potentially a few more on the way, the last six months of 2024 are unlikely to mirror the first half of the year.

As the Canadian Real Estate Association (CREA) noted in a recent market forecast, housing markets throughout the country have been unusually “quiet” this year thanks to still-high rates and lingering uncertainty. But that doesn’t mean home sales will stay soft going forward.¹⁰

On the contrary, market activity is expected to pick up once rates recede.^2,7 According to new research from BMO, aspiring homebuyers’ financial readiness is looking up. But 72% say they’re waiting for lower rates before they get serious about buying a home.¹¹

New federal measures could also juice the housing market by boosting demand from first-time buyers. New homebuyers, for example, can now borrow up to $60,000 from their RRSP to fund a down payment—$25,000 more than the Home Buyers’ Plan previously allowed. Beginning August 1, first-time buyers with insured mortgages will also be allowed a 30-year mortgage term if they purchase new construction.¹²

Affordability constraints will still be a major sticking point, though, for many Canadian homebuyers, which could dampen sales if buyers and sellers continue to butt heads over prices.¹³

What does it mean for you? Get ready to move quickly. Increased competition almost always means faster home sales—and a need for quick decision-making. If you’re a buyer, make sure your papers are in order and you have cash ready for a deposit. And if you’re a seller, consider listing now before pent-up supply leads to an uptick in inventory. After all, budget-conscious homebuyers aren’t the only ones who have been sitting on the sidelines for the past two years.

PROPERTY VALUES WILL CONTINUE TO INCREASE

The good news for homebuyers: Today’s home prices are down significantly from where they were toward the tail end of the pandemic. The bad news: That’s probably not going to last. Experts say that home prices have almost certainly bottomed out.^{14, 15}

In fact, the CMHC thinks home values could return to peak levels as early as next year before hitting an all-time record high in 2026. As the CMHC notes, home prices and sales declined significantly after rates began to jump in 2022. But in the years since, Canada’s population boomed at a record pace, while many people saw their incomes and savings increase. As a result, there’s now a bigger pool of potential homebuyers.¹⁶

That doesn’t mean, though, that home sales will be so strong that sellers can expect the same level of price gains they saw before. As researchers at TD Bank note, rate cuts will help boost prices for now. But “affordability pressures will likely keep the gains from being even stronger.”¹⁵

The CMHC projects that lower-priced homes will enjoy the fiercest competition. But overall sales activity will be more modest than in 2020 and 2021 when rock-bottom rates made mortgage payments more affordable.¹⁶

What does it mean for you? Even with rate cuts, a typical mortgage payment will be difficult for the average household to absorb, so expect affordability issues to limit overall price growth. Sellers will need to be realistic with their asking price and negotiation tactics—especially if they’re looking to close quickly. Buyers, on the other hand, might not want to wait long if they can afford to make a deal. Increased competition could lead to a bigger-than-expected price surge.

EVEN WITH MORE HOMES FOR SALE, INVENTORY WILL BE TIGHT

According to a winter survey by Dye and Durham Ltd., more than a quarter of Canadians have been holding out for a rate cut before buying or selling a home. So we could see a lot more homes go up for sale this year once rates decline.¹⁷

Already, inventory is picking up as more sellers come to market, giving new buyers more choices when comparing homes. The spring market, in particular, saw a notable jump in listings.^3,15

But even if more homes come to market this summer and fall, the total number of Canadians who want to buy a home will still surpass the number of homes available. So both the resale market and new home market are likely to remain squeezed for some time.¹⁸

In fact, TD Economics estimates that Canada will be short of more than 300,000 homes between 2023 and 2025. Adding to the problem: Housing construction continues to lag population growth and, despite some recent improvements, it is still far from catching up.¹⁸

Persistently high rates are also discouraging builders from starting new projects. So the inventory of available homes is likely to get tighter. The CMHC expects housing starts to decline in 2024 and drop even more significantly in 2025.¹⁶

What does it mean for you? With inventory increasing and many prospective homebuyers still priced out of the market, buyers who can afford it may be able to retain some bargaining power—especially for premium homes. However, total inventory is expected to remain tight, so sellers are still more likely to have the upper hand. Competition for more affordable homes will be especially steep.

WE’RE HERE TO GUIDE YOU

With nationwide news like rate cuts still playing a big role in today’s housing market, it can be useful to get a high-level overview of what’s happening across Canada. But the most important factors behind most real estate transactions are local. So on-the-ground expertise is essential.

As local market experts, we can help you navigate your neighbourhood’s housing market with ease and understand what’s driving home values and sales. If you’re considering buying or selling a home, contact us for a free consultation so we can help you build a successful plan.

Sources:

June 1, 2024

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Uncategorized

Multigenerational Home Buying: How to Find a Home That Fits Your Whole Family

Mid-Year Market Update for 2024: What Buyers and Sellers Need to Know

TAMMY SHARP

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