Multi-generational living - It's one very smart solution.

Friday Aug 25th, 2023


With the cost of buying a home out of reach for many first time buyers, could ‘multi-generational’ living be one of  'the' solutions? 

Families are stepping in to to help their adult children afford a house but in ways you may not think.

Traditionally, parents contribute downpayment money to help their kids buy a place of their own. These days, they are offering and allowing them to purchase a share of their own home so they can all live together in the same property… but separately. Often it takes some renovation to separate the home into 2 separate suites but for some families, it’s definitely worth it.

The 2021 census tells us that almost a million Canadian households are made up of multiple generations of a family sharing a home, a 45-per-cent increase over 20 years earlier. Expect to see more people co-owning homes as a result of high housing costs.

Here’s how multi-generational housing can work. First, the adult children became co-owners of the home. They get approved for and take out a mortgage for a percentage of the home’s value and give that to the parents who can use it for things like renovations, debt reduction or to build up their retirement fund. 

The shared arrangement benefits everyone financially. The children have a great advantage since they don’t need a down payment and the parents can use the new infusion for short or long term investments.

It can take a while to work out all the details of a co-ownership agreement addressing issues such as living/lifestyle boundaries, privacy, home maintenance costs, a breakdown in friendly relations between them, as well as the possibility of the death of one of the owners.  

Plus the money the kids had put aside to buy a house can be used for renovations to the home - maybe to separate it into 2 separate living units, adding bathrooms and a 2nd kitchen.  And the equity the parents gain could update the heating and cooling systems for both households. And, thinking about the future as we age, how about even adding an elevator? 

Another advantage is that the mortgage the children take on is manageable. Comparably, it might have only been enough for a small one bedroom + den condo.     

The social benefits of multi-generational housing are just as positive as the financial ones.  As parents age, they have their children right there to help manage the home and their needs.   

The potential reciprocal benefit is child care. If the kids are thinking of starting a family, there’s help just downstairs. Many see themselves as being able to be hands-on grandparents - and even giving the parents those oh- so needed ‘date nights’ while they get to really spoil their grandchildren!

Unaffordable housing has prompted Canadian parents to pour billions of dollars into down payment gifts for their adult kids. My clients are already gifting their children part of their inheritance now, to invest in a home, that will be a solid future asset.  

However, many many parents, while they would love to be able offer this to their children, just can’t. Multi-generational living isn’t a fad, it’s an invaluable opportunity for families to share ownership of somewhere everyone will love coming ‘home’ to.

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