Housing crisis prompts Canadians to get creative to buy a home

Alternative routes to home ownership picking up steam as people try to enter housing market

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Canadians anxious to get into the housing market amid an affordability crisis appear to be getting creative to make their home ownership dreams come true.

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Potential homebuyers are looking past tradition and considering co-buying with friends or family, renting to own or buying houses with rental potential to bring in extra money to pay the mortgage bill, according a recent Re/Max Canada survey conducted by Leger Marketing Inc.

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One-third of Canadians are currently considering such alternative routes to home ownership, while another 48 per cent would consider doing so in the future, the survey said. Of those non-traditional methods, 21 per cent would choose renting to own, 21 per cent like the idea of co-ownership and 17 per cent would be willing to rent out a portion of their space.

Some have already pulled the trigger on foregoing tradition so they can afford a home. Among those who already own, 13 per cent said they took a non-traditional route to purchase their property. In addition, Re/Max said 71 per cent of the regions it surveyed across Canada recorded a small increase in the practice.

The emerging trend comes as a supply shortage and high interest rates spark an affordability crisis that’s made it more challenging for many to enter the housing market. Inflation and an overall higher cost of living have added to the financial squeeze, making it more difficult for couples or individuals to come up with a five to 20 per cent down payment on their own.

Despite those challenges, home ownership remains a goal many aren’t willing to give up. Almost three-quarters consider buying a house the top investment they can make, Re/Max said.

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“Canadians from coast to coast are grappling with affordability challenges, but at the same time, their desire to achieve home ownership remains strong,” Christopher Alexander, president of Re/Max Canada, said. “This is prompting many to seriously consider alternative ways to get their foot in the door.”

Now could be a good time for some people to jump into the housing market, said Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce. Many potential homebuyers have been waiting on the sidelines for the Bank of Canada to cut interest rates, which some economists expect to happen by June. But while rates are set to ease, affordability challenges won’t follow suit, he said.

“Despite some interest rate reprieve in 2024, Canada is still dealing with an affordability crisis due to a lack of inventory and increasing demand, which will persist until the country addresses the problem adequately,” Tal said. “Considering this, creative solutions like co-ownership may be an option for many Canadian homebuyers looking to achieve the dream of home ownership.”

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Consumer prices in the United States rose again in February in a sign that inflation remains a persistent challenge for the U.S. Federal Reserve.

Prices rose 0.4 per cent from January to February, higher than 0.3 per cent the month before, the Labor Department said Tuesday. Compared with a year earlier, consumer prices rose 3.2 per cent last month, faster than January’s 3.1 per cent annual pace.

Despite February’s elevated figures, most economists expect inflation to continue slowly declining this year. At the same time, the uptick last month may underscore the Fed’s cautious approach toward interest rate cuts. Most economists expect the first cut to arrive in June, though May is also a possibility.

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  • Prime Minister Justin Trudeau meets with Alberta Premier Danielle Smith in Calgary.
  • Today’s data: National balance sheet accounts; U.S. quarterly services survey
  • Earnings: Volkswagen AG, Canada Nickel Co., Dollar Tree Inc.

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Stock markets, March 13, 2024

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Today’s Posthaste was written by Victoria Wells, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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