Multi-Generational Home Buying: How to Find a Home That Fits Your Whole Family

For many home buyers, multi-generational 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 multi-generational 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 multi-generational living––often for cultural reasons.3 With multi-generational 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 [multi-generational 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 multi-generational homes are healthier and tend to live longer. They also enjoy more financial security.5 That's not to say that multi-generational 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 multi-generational living, along with tips for finding a home that's suitable for a diverse group.  

WHAT TO CONSIDER BEFORE SHOPPING FOR A MULTI-GENERATIONAL 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 multi-generational home and how each of you might benefit. For some families, multi-generational 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 neighborhood 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 MULTI-GENERATIONAL 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 multi-generational 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 Multi-generational 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 MULTI-GENERATIONAL 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 home buying 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 favorable 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.

BOTTOM LINE - Multi-generational 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 multi-generational 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:

1. Statistics Canada - https://www150.statcan.gc.ca/n1/daily-quotidien/220713/dq220713a-eng.htm

2. The Walrus - https://thewalrus.ca/multigenerational-living-often-makes-sense-that-doesnt-make-it-easy/

3. Vanier Institute of the Family - https://vanierinstitute.ca/resource/sharing-a-roof-multigenerational-homes-in-canada-2021-census-update/

4. HuffPost Canada - https://www.huffpost.com/archive/ca/entry/three-generation-homes_ca_5cd4f84ce4b07bc729739712

5. SSM - Population Health - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5769098/

6. Today's Parent - https://www.todaysparent.com/family/family-life/multi-generational-homes/

7. CBC - https://www.cbc.ca/news/canada/british-columbia/canada-bc-multi-generational-housing-affordable-1.7134448

8. Realtor.ca - https://www.realtor.ca/blog/understanding-canadas-multigenerational-home-renovation-tax-credit/30088/1362

9. 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/

10. Financial Consumer Agency of Canada - https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score.html