What do you do when Toronto’s housing prices are two, four or even six times out of your price range? Six Millennials found one solution by pooling their money to purchase a $1.3 million detached home in Toronto’s Little Portugal neighbourhood. In the end, they got a lot more than a piece of Toronto’s desirable downtown real estate. They cultivated a thriving community, and are now sharing their story to help other Canadians learn about the possibilities of co-ownership.
In Toronto’s red-hot housing market, co-ownership has been on the rise, with siblings, friends, colleagues and sometimes complete strangers combining their assets to purchase property in Canada’s most expensive market. In August, the average detached home in Toronto was a staggering $1,246,392. The average condo was $619,307 last month, meaning even those with six figure incomes are getting shut out of the prohibitively expensive market.
“Co-ownership is one solution,” says Lesli Gaynor, a Toronto-based realtor who focuses on helping homebuyers navigate the ins-and-outs of co-ownership. “It’s still a very privileged position to be talking about co-ownership. You have to have a job and you still have to have some money and you still have to have a great credit rating.”
Finding a lender.
While most traditional mortgages have one or two people on the title, typical mortgage products can easily accommodate up to four names. “It’s just a regular mortgage product without extra premiums,” says Gaynor. “It’s when you get beyond four that it gets a bit tricky.”
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It took the six co-owners significant shopping to find a lender who would work with them. In many cases, they were turned away because the systems and structures simply weren’t in place — the form only had four lines on it for their names instead of six, for example. The non-traditional set-up was also deemed high-risk by most lenders. “Truthfully, when you have six people, there’s actually less risk because it’s more likely that we could collectively cover the money,” says Mandy Sherman, one of the co-owners who laughs remembering being ghosted by an insurance broker. “Someone I was working with for a while, he literally just stopped returning my calls.”
They ended up going with DUCA Credit Union, who took an ‘everything is figureoutable’ attitude and already had a co-buying product to build upon.
Drafting a legal agreement and planning for the what-ifs.
The six co-owners also worked with a legal team to draft up a comprehensive contract which they’ve committed to for their five year, fixed-rate mortgage. The legal agreement covers the what-ifs and worst case scenarios — what happens if someone dies, falls off a ladder and can’t work for six months, etc. They also spoke with experts in the field of co-housing and had many frank conversations and meetings together to go into the arrangement with eyes wide open.
From there, they developed a house code. “The code is what our house norms and expectations are,” says Alex Stokes, another housemate in the arrangement. The code is much more flexible then their legal agreement, but it helped the group hammer out potential pain points of living together before they even got the keys. Things like chores, food buying habits, and how (and when) to have a conversation about something.
Despite owning different percentages which range from two to 38 percent, they each have an equal voice in the day-to-day decisions, which are made by consensus. “There are some expenses that will impact larger percentage stakeholders more and that’s taken into consideration by everybody when we’re making a decision around that,” says Sherman.
Stokes credits good communication skills and emotional intelligence as the most important qualities if you’re going to live communally. “We’re all very different, we come from different backgrounds, we all have different experiences and things we bring to the table. But we’re all, at the end of the day, willing to sit down, listen, and share and I think that level of understanding and those communication skills are very important.”
Coming back to community.
“For nobody in our house was the financial component or access to the housing market the main motivation for doing this,” says Sherman. “For all of us, it was much more about community building and community living.”
Both Stokes and Sherman note that by combining their resources, skills and lives, they’ve built what they feel is an extremely high standard of living. For example, they contribute equally to groceries each week (averaging about $50 a week) but because they buy it in bulk, they get access to healthy and ethically-sourced produce that would likely blow their budget if they were buying it individually.
Aside from the financials, the biggest benefits have been social. “People are experiencing a lot of isolation,” says Stokes. “Just knowing that you have that community to support you, it’s really bolstering.”