Welcome to this month’s installment of Dear Urbaneer, where I take on tough real estate questions from our clients and readers.
This month’s edition comes from a reader who reached out after reading last month’s Dear Urbaneer, around the Bank of Mom and Dad, where a couple was considering helping their adult child buy a home.
My reader this month is thinking along the same lines, but is thinking outside the housing box, so to speak, to determine ways to help their kids afford a home.
Dear Urbaneer,
I read your post with great interest about the growing role of the Bank of Mom and Dad in Toronto Real Estate.
Like these parents in the post, I would like very much to help my son and his wife afford a home, but I don’t have tons of savings to contribute. Meanwhile, I am getting older and have begun to explore options for the care I will likely need in the not-too-distant future, and am realizing that those costs could be substantial.
I was thinking about investing in home renovations instead of helping my son with a down payment, with a goal of creating space for their family to live along with me. Are you seeing any trends emerging among other family dynamics and home ownership, beyond the Bank of Mom and Dad?
Signed,
All In the Family (Home)
Here is my reply:
Dear All in the Family,
The housing market, especially in pricey Toronto, is truly a family affair and growing even more so, with affordability elusive for many, more people living longer, and seniors wishing to age in place in larger numbers. Many see multi-generational housing as a solution to all of these.
According to Stats Can, multi-generational homes increased by more than 15 percent over the decade ending in 2021 in Toronto.
As far as where the money is coming from to fund Multi-Gen housing, this article from Real Estate Magazine “Multigenerational And Creative Living Solutions On The Rise In Response To Affordability Challenges” addresses exactly what you are referring to in your question. It talks about how the rise in multi-generational housing is adding another dimension to the Bank of Mom and Dad, with more parents looking to sink funds into renovating their home so that the whole family can live together, rather than gifting them money to live elsewhere on their own.
One of the benefits from an affordability standpoint is an increase cash flow in a household by pooling assets and income, reducing costs and need to accumulate more consumer debt by being able to generate this cash flow, and having the ability to help with childcare and/or eldercare, by having multiple generations under one roof (or very nearby).
This CBC article “Why Multi-Generational Living Is Becoming More Common In Canada” chronicles various families choosing multi-generational living arrangements, largely motivated by the high cost of housing.
The Vanier Institute in its ‘Families Count 2024 Project‘ found in their analysis of the 2021 Census data that “Indigenous and immigrant families— two fast-growing population groups— are more likely than others to live in multigenerational households”, and that this is most likely because they have fewer options and resources. As someone who believes housing is a right and not a privilege, it is not lost on me that there are many underhoused housesholds – that includes multi-gen families.
It’s not just the high cost of housing that is a challenge, but the high cost of care down the road for seniors as this Toronto Star article outlines “Close To Home. As You Approach The Age Of Needing Residential Care, Here Are Your Options — And The Price Tag“. Check it out.
As Canada continues to become more multicultural so, too, will the number of multi-gen households, as this form of living aligns with the cultural values of many immigrant communities. An article in the Montreal Gazette published in 2018 said the top 10 cultural groups in Canada to occupy multi-gen dwellings were those with Punjabi and Bangladeshi descent, followed by Pakistanis and Sri Lankans as well as Tamils, Albanians, Cambodians, East Indians, Afghans and Filipinos. The practice of multiple generations living together and sharing responsibilities strengthens bonds, reinforces values and ensures their cultural traditions and languages are taught to younger generations.
The Cost Of Living, Housing Expenses & Indebtedness Is Fueling The Growth In Multi-Generational Housing
Given inflation and the Bank of Canada’s 10 interest rate hikes totaling 475 basis points over a span of 16 months starting in March 2022, money issues are coming to the surface and many families are having to face some hard truths.
The fact is that, while some families have been able to grow their wealth through real estate, many others have been forced to take on more substantial debt – in many cases to purchase a home, but also with credit cards and other consumer loans.
What’s more is that young adults, laden with debt from school and facing the challenges of a soft job market are staying at home longer, either because employment is rocky, or because they are trying to save enough money for a downpayment to get on the property ladder.
With interest rates being higher (although the Bank of Canada recently lowered interest rates on October 23rd, 2024 with the most substantial cut of the four rate drops – by 0.5% – since June 5th, 2024), the costs of carrying that debt – along with paying for everything else, is stretching many households, young and old, very, thin – and making them financially vulnerable.
This report issued earlier this year by Equifax Canada “Financial Challenges May Be Driving Rise in Multigenerational Living Equifax Canada Market Pulse Quarterly Consumer Credit Trends Report” chronicles how these debt levels are contributing to a “transformation in the face of Canadian households, with more families opting for multigenerational living arrangements. As economic challenges persist and immigration patterns evolve, a growing number of young Canadians are finding themselves living with their parents and grandparents, reshaping the traditional family structure in Canada.”
According to Equifax, in Ontario younger adults are staying at home longer due to high student debt during a time where the cost of living has soared, with 32.8 percent of households housing more than one generation under the same roof.
Equifax reports that delinquencies are climbing in Ontario, particularly among young adults, on mortgages, auto loans and credit card debt – which means many are either patrons of the Bank of Mom and Dad, and/or they’re already living under the same roof with them too.
This story goes into greater detail about the Equifax report “Shocking Number Of People In Ontario Now Living With Family Amid Affordability Crisis“.
Multi-Generational Living Combats Loneliness
Combining the older and younger generations in the same house isn’t just about cutting costs and consolidating debt but it also brings convenience and peace of mind when it comes to offering care. Having older and younger generations living together helps combat loneliness, which is a serious problem, particularly amongst the elderly, especially when they are living alone.
Engaging regularly with others is not only a safety issue, it’s also important to help combat cognitive decline.
According to the World Health Organization, loneliness is on its way to becoming a global epidemic. The report found that loneliness has serious health implications mentally and physically. One of the authors of the study, likens the negative impacts on health similar to smoking 15 cigarettes a day, and increased premature death by 30 percent.
A report released by the National Institute on Aging had similar findings about negative mental and physical health effects from loneliness. They also found that having company either of a partner, or of their children helped seniors significantly.
Respondents in this study, show that 40 percent of adults over age 50 are at risk for social isolation, in part because of their living arrangements. This Global news story goes into further detail on the NIA study “The Reality Of Loneliness Among Canada’s Elderly. Why Is It Getting Worse?“
I wrote about the impacts of loneliness, aging in place and solutions in Dear Urbaneer: Do We Age In Place, Downsize, Cohouse Or Move To A Retirement Community?
Additionally, having a household that fosters engagement socially, emotionally and mentally with family members across generations, is a very effective solution, with the added benefit of potential cost savings, depending on the circumstances.
The need for community is a factor in another home ownership model that is gaining popularity – co-ownership – where friends or partners band together to age in place supportively (while benefitting from greater affordability at the same time).
Finding – Or Creating – A Multi-Generational Dwelling
From finding condos in the same building, to finding a freehold home that can be converted, to creating an ancillary dwelling unit, Toronto families are finding creative ways to accommodate their multi-gen goals.
Back in 2019, I wrote about the multi-generational dwell hunt in Dear Urbaneer: What Are The Important Considerations Surrounding Multi-Generational Housing?, but let’s re-visit, as a lot has happened in housing since then, including changes to zoning and changing market conditions that could influence decisions around finding (or creating) a home suitable for multi-generational living.
The movement towards multi-gen is so substantial that the Federal government launched the Multigenerational Home Renovation Tax Credit (MHRTC) starting with the 2023 tax year for senior citizen homeowners who renovate their homes to accommodate multi-generational living.
From the Government website: If you are eligible, you can claim this credit for certain renovation expenses to create a self-contained secondary unit. The secondary unit must allow a senior or an adult who is eligible for the disability tax credit to live with a qualifying relative. You can claim up to $50,000 in qualifying expenditures for each qualifying renovation that is completed. The tax credit is 15% of your costs, up to a maximum of $7,500, for each claim you are eligible to make.
Multi-generational housing helps not only homeowners, but also potentially reduces health care and other government care costs, by having help at home made easier with the right home.
In Toronto, a popular choice for multi-generational housing today is to build a laneway dwelling (since 2018) or garden suite (since 2022) on an existing property which has become an as-of-right for properties meeting specific criteria pertaining to setbacks and access. It’s a great way to maintain independence, but be very close by – a benefit both for caregivers, and for those receiving care.
Multi-gen families also seek freehold properties which are either already separated into multiple units (like mid-century purpose-built duplexes), or that could easily be converted. If you were truly seeking to create a family compound, All Residential Properties In Toronto Can Now Become Four Units As-Of-Right in the City of Toronto and, if the property meets the necessary criteria, a fifth unit in the form of a laneway dwelling or a garden suite. Furthermore, multiplexes up to 4 units are exempt from development charges and cash-in-lieu of parkland dedication which is a substantial cost savings.
Location matters with all real estate purchases, but location is even more important when you’ve got to serve the needs of multiple generations, which is one of the appeals of urban living. Select a home close to schools, parks, hospitals and community centers, as well as shopping and cafes and of course, access to public transit.
Regardless of what type of home you choose (or create), the principles of Universal Design, should be adopted, as I wrote about in this post About Universal Design: Applications For Aging In Place & Toronto Real Estate. Universal Design, simply, elevates a space to its best use, because it makes it most accessible to the most people.
What many people don’t realize is that many of the principles of UD, also happen to be design elements that are trending, including open-concept living, single floor materials without transitions (usually wood or tile), smart home tech and curbless showers, for example.
For seniors and little kids, this type of design makes home safer, and helps the sandwich generation manage and monitor household members more easily.
The other thing that families must consider is balancing privacy with access to each other. Ideally, each generation would have their own separate space, with common areas shared, if you are sharing a home. Or, having a separate entrance if you have multiple residences within a home.
Finding a home for all of your family members young and old is a tall task. With decades of experience in finding the home that fits you just right – for today and for tomorrow too – The Urbaneer Team would be delighted to lead you on your housing journey. We are here to help!
If you enjoyed this, here are some of our past posts that explore different housing types & trends:
What’s Trending In Toronto Real Estate?
Trending In Toronto: Single Family Houses Replaced By Boutique Condo Townhomes
Dear Urbaneer: What Are The Buyer Profiles For Multiplex Properties?
Because Knowledge, Experience & Time = Toronto Real Estate Wisdom
On Garden Suites In Toronto, By The Architect Builders Collaborative, Sustainable, & Urbaneer
Dear Urbaneer: How Can Minimalism Help With Affordability & Sustainability In Housing?
The Need And Demand For Live/Work Properties In Toronto
Dear Urbaneer: What’s Going On With The Toronto Condo Market?
For Loft Sellers In MLS District E01, Nearly 1 in 5 Took A Financial Hit When Selling This Year
Dear Urbaneer: Has The Toronto Real Estate Market Gone SLO MO?
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Since 1989, I’ve steered my career through a real estate market crash and burn; survived a slow painful cross-country recession; completed an M.E.S. graduate degree from York University called ‘Planning Housing Environments’; executed the concept, sales & marketing of multiple new condo and vintage loft conversions; and guided hundreds of clients through the purchase and sale of hundreds of freehold and condominium dwellings across the original City of Toronto. From a gritty port industrial city into a glittering post-industrial global centre, I’ve navigated the ebbs and flows of a property market as a consistent Top Producer. And I remain as passionate about it today as when I started.
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