Non-Traditional Ways To Buy A House

A recent TD Bank survey showed that while a quarter of first time home buyers did so on their own there is a growing trend of buying a house as a group.  In fact four out of 10 people surveyed think that buying property with friends or family members is a great way to get started.

Vacation property was the more common group purchase, but now there’s a shift towards non-traditional ways of buying a primary residence.

Tenants in common

Pooling resources with compatible friends and/or family members could give buyers more house than going on their own.  They may also be able to make a larger down payment on their purchase, thereby avoiding mortgage insurance if they can put down 20% or more, resulting in significant savings.

It’s becoming popular with young, single professionals, siblings, and single parents who share not only costs but also childcare, meals, and household responsibilities.

Related: How to invest in real estate

This type of arrangement can be more complicated than simply being roommates in a rental.  It requires careful planning to avoid potential future problems and buyers need to agree on such things as down payment, budget, and maintenance.

Cultural preference

Starting in the 1970’s, the wave of new immigrants entering Canada resulted in many of them looking for homes that could accommodate their large extended families under the same roof.  This is a staple housing type in many countries and a cultural preference.

Goodnight Grandpa.  Goodnight John-boy

Those who remember the TV show “The Waltons”, or even “The Beverly Hillbillies” know that multi-generational households – grandparents, parents, and grandchildren – were quite common up to the early 1900’s, especially in rural areas.  Prior to World War II almost one quarter of households were blended.  This was how families used to take care of their oldest members.

Related: Talking to your elderly parents about money

Now these several-generation households are again on the rise.  Family structure is evolving in some ways back to how families used to live.  According to Statistics Canada, the number of grandparents living with grandchildren jumped 45% between 2001 and 2011.  The driving force is changing demographics.

The Sandwich Generation

You would expect Boomers to start downsizing their homes, but instead they are moving their elderly parents in with them.  Plus the wave of “boomerang kids” moving back in with their parents for financial reasons is again creating the three-generation household.

Mother-in-law suites have been popular for a while, but now some homebuilders are offering multi-generational configurations in their new designs to accommodate this lifestyle.

One of my former co-workers had a house built specifically for himself, his wife, daughter, son-in-law, and two grandchildren with two master bedrooms and separate living and eating areas.  Everyone can spend quality time together as a family as well as have privacy and independence.

While this trend is not skyrocketing in popularity just now, there is a clear niche for this type of property and the demand may continue to increase.

Final Thoughts

Communal living definitely is not for everyone, but it can be mutually beneficial.  Multi-generational homes can promote positive experiences and benefits:

  • Grandparents and grandchildren can develop a stronger bond.
  • Parents have peace of mind knowing grandparents are not alone.
  • Cost sharing is appealing if mortgage payments and other household expenses are high.

Families (and friends) may be coming together because of the economy, but they are staying together because it works.

Could this be the way of the future?

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  1. Jeff Gingerich on May 7, 2014 at 6:47 am

    Four out of five women over 65 are single, widowed or divorced so I’d add them to the potential pooled buying mix.

    • Boomer on May 7, 2014 at 7:41 am

      Hi Jeff: You make a good point. Demographics have definitely been changing. It will be interesting to see how it will play out.

  2. Bet Crooks on May 7, 2014 at 7:09 am

    Another interesting trend fueled by immigration is the increase in 3- and 4-bedroom apartments. Families with 4 or more children don’t want to try to cram into a 2-bedroom in a high rise. In our area, apartments are responding to the need by taking down an interior wall between two existing apartments, thus creating 3 and 4 bedroom apartments with some of the common areas shifted to make an eat-in kitchen etc.

    • Boomer on May 7, 2014 at 7:45 am

      @bet Crooks: I have especially noticed this trend since I currently have my house up for sale. The way it is designed it could easily be converted into separate living accommodations with not much trouble. People seem to be looking for a larger house for their big families, or extended families.

  3. Dan @ Our Big Fat Wallet on May 7, 2014 at 9:13 am

    Some of the home builders in town have now started to offer a seperate suite on top of a detached garage. It isnt designed to be a rental (requires specific zoning) but as a seperate living space for families. I’ve heard of basement suites but a seperate suite above a garage is another sign that builders now cater to families with boomerang kids, aging parents etc.

    • Boomer on May 8, 2014 at 10:15 am

      HiDan, I’ve also heard of additions to existing houses and even a little “casita” on the property. You’d have to have a larger lot for these than what seems currently available for new housing, though.

  4. Dave Lalonde on May 7, 2014 at 1:51 pm

    I really like the Sandwich Generation idea. It’s not too often that you find the man of the household making constructional plans for his married daughter. The idea of having a close family can be so beneficial for the children’s relationships, but everyone needs their space. I like what your friend did there!

    • Boomer on May 8, 2014 at 10:19 am

      Hi Dave: I was surprised to learn about his plans at the time – probably because it’s not really the usual way to go. They are a close-knit family, though.

  5. Loonie Lover on May 7, 2014 at 9:03 pm

    I hear what you’re saying about immigrants often living in large extended family groups, but I wonder as they become more affluent, and more Canadianized, if that will change. Often, there is not a lot of choice in the old country, so that is just what people are used to. Children who grow up here might not be too crazy about never moving out. From my experience in Taiwan, just because people live together does not mean they are happy doing so.

  6. Boomer on May 8, 2014 at 10:23 am

    @Loonie Lover: It’s true that often immigrants can become more “westernized,” but many also keep to their cultural values. In the end it will become a personal decision and, I agree, it’s not for everyone.

  7. Rick Manjin on May 8, 2014 at 2:31 pm

    My cousin and his wife sold his house in Vancouver, B.C. in March-2011 and said the same house they sold for $1,329,000 is now selling at $1,090,000.

    They took the net proceeds of $1,239,000 and bought 10 provincial strip bonds yielding average 4.64% and average maturities of 20 years.

    They topped up their RRSP’s and TFSA’s as they had none and now used up all their room of $290,000 and $62,000 with these investments.

    He told me they did this because they are now 50 and 51 years old and just started receiving a few months ago $7,000 a month from a 25 year term certain annuity.

    This is from non-registered money so $3,000 a month is non taxable.

    They currently found a job as a landlord team in a decent 30 unit building and are compensated with free monthly rent and net $250 a week.

    They raised a grandchild for 18 years which is studying in his second year as an auto technician.

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