It’s no secret that buying your first home is not shaping up to be the dream that many Canadians thought it would be. While previous generations were able to afford a down payment after five years of saving, it now takes the average Canadian urban homebuyer 28 years to save for the recommended 20% down payment. 

So what can we do? Are younger generations going to give up on the dream of homeownership and be stuck on the rental treadmill forever? 

That’s where alternative homeownership models come in. Over the past few years we’ve seen a number of new models pop up to try and offer more accessible options for owning a home and getting into the housing market. With such large barriers to traditional homeownership, we need alternative homeownership models more than ever. 

Lack of affordable housing

Housing prices are without a doubt the largest barrier to owning a home. In Canada housing prices are at an all time high, especially in big cities like Toronto and Vancouver. In fact, according to the National Bank of Canada’s housing affordability monitor you need to have a household income of almost $200k in order to afford a home in Toronto, with $1,146,667 being the price of a representative home in the city.

These record high prices are not viable for the majority of Canadians. In Toronto, the average home price is now 10 times the average Torontonian’s income. With this growing gap, it’s no wonder that a shortfall in salary was listed as the number one barrier impacting personal housing affordability in the 2021 RE/MAX housing report. 

On top of shortfalls in salary, expensive rent is another reason why so many Canadians are struggling to save. With such high demand for housing in major cities, we’re seeing not only housing prices skyrocket, but the cost of renting has also reached record highs. In Toronto, rents are expected to climb a whopping 11% in 2022. 

Because of this young people are spending the majority of their adult lives trying to save up for a downpayment, stuck on the rental treadmill. 

The need to qualify for a mortgage

One of the biggest barriers to entering the market with traditional homeownership is needing to qualify for a mortgage. This can be especially difficult for certain groups of people, such as newcomers to Canada or people that are self-employed. 

On top of that, for those that are able to qualify for a mortgage, with such high home prices in Canadian cities many people fear becoming house poor. 

With so many large barriers to entering the housing market, traditional homeownership is not viable for a large number of aspiring homeowners. Alternative homeownership models are emerging to increase accessibility, whether through shared spaces, shared equity or lease purchase programs, these models are working to create long-term accessible housing options to help get young people into the market.

Key’s co-ownership solution is a new model that removes the two largest barriers to homeownership; saving a significant amount for a downpayment and the need to qualify for a mortgage. You can learn more about how Key’s model works here.

If you’re an aspiring first-time homebuyer struggling to get into the housing market, you can learn more about different alternative models here and why co-ownership is one of the best alternative homeownership models for first-time buyers.