Co-Own a Home? Yes or No?

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future is here

There is a lot of talk about co-ownership as a way to resolve the problem of affordable housing and allow more people to own their own homes (or at least a portion of their own). How co-ownership might affect you. Here’s MortgagePRO version of what you need to know.

The following are the steps involved in co-ownership:

Co-ownership typically refers to a shared living arrangement in which more than one person owns and lives in the same house together. Living areas, such as kitchens and living rooms, may be shared by co-owners, or the home may be divided into separate units. Each co-owner is responsible for the upkeep and care of the home as well as some amenities. A written agreement memorializes how the co-ownership will work and function from a legal and practical standpoint.

The following are advantages of co-ownership:

Individuals and families can benefit from co-ownership housing by expanding their options, including:

  • Home ownership is more affordable when people pool their resources. A mortgage also gives you the opportunity to build equity and the security that comes with owning a home
  • Having more choices in neighborhood location: people have a wider choice of housing locations within their budget (e.g., residential neighborhoods with mostly single-detached homes).
  • By co-owning larger houses and heritage properties, smaller households can maximize space within larger homes and heritage properties.
  • Creating a community is a voluntary act where a group of people creates facilities, indoor and outdoor common spaces and services to match their needs

Canada is still in the beginning stages of co-ownership, but it’s growing in popularity due to the many challenges of accessing home ownership.

 Among the trends emerging from COVID19 is the concept of “freedom of place” and greater flexibility: the ability to work remotely, either part-time or full-time.

Homeowners and purchasers are reconsidering where and how they live and work due to the changes we’ve seen over the past two years. 
In addition, many workers are choosing to work remotely, part time or full time, in markets that were traditionally considered second-home markets. In addition, the down payment, the mortgage payment, and other expenses are spread out between three or more people.

In what ways does co-ownership have advantages and disadvantages?

A group of individuals live nomadically as part of a co-ownership or a group that owns a business together. Imagine that a person could purchase a 14% share of a house and live there with 3 others OR they could buy that same percentage of a house in an urban center and another percentage in a different location (urban center or recreational property) and live in different locations throughout the year. Even though co-ownership sounds perfect for many individuals, it’s possible that many families could benefit from co-ownership by continuing to have a primary residence that they use, but then living in one or more additional residences throughout the year. By 2022, the technology we have access to will enable the entire market and bring like-minded individuals together. 

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In addition, this sharing mechanism could have a very positive impact on housing since we are in the midst of a housing affordability crisis pretty much everywhere, and it is not improving any time soon. There is a lot more demand for homes than supply. 

In second home destinations, the housing affordability crisis is more acute because there is an influx of new second home buyers who are buying all the houses at the median price level. Because of this, it is difficult for residents to afford their main homes. There is a lot to be said for co-ownership as a solution to the housing crisis in those markets. The sharing economy also benefits local economies and the environment. In the average household, just five weeks are spent in a second home each year. An empty house every two seconds means another house must be built to absorb demand, creating an even bigger carbon footprint while depriving local businesses of revenue during off-season months because owners aren’t even in the house supporting local businesses.

Co-ownership is not for everyone, but it should not be discarded too quickly because it can certainly work for many of your clients – and it is a method to get them into homeownership. So you’ll have to work with them in order to secure the necessary financing for a property or properties.

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