Three ways to afford a single-family home
Detached houses in the GTA cost $1 million-plus to purchase. How to afford one?
It can seem as though it’s nearly impossible to afford a detached home in the Greater Toronto Area these days, with the cost of real estate as sky high as it’s become. According to Altus Group, the benchmark price for new single-family homes in the GTA in August was a whopping $1.08 million. That’s actually down 4.1 per cent versus the same period last year, but it’s still a big chunk of change.
Condominiums represent a slightly more affordable alternative to detached homes, but not everyone wants to live in a multi-storey tower. Plus condos don’t always have a large outdoor space or have backyards, which can be an issue, particularly when you have kids. So if you’ve got your heart set on purchasing a detached home, what are your options? Here are three possibilities to explore:
1. Be a landlord of your own home
By using a portion of your detached house as a rental property – creating a basement suite is the most common approach, but laneway housing is another solution being examined across Toronto – you can generate significant revenue to help you pay your mortgage. You would also be contributing much-needed rental housing stock in a city where vacancy has been hovering around one per cent. Note, however, that being a landlord comes with great responsibilities:
You’ll have to find tenants and manage relations with them, fix things in the rental suite (or pay someone to do it), and comply with various rental bylaws. It’s a lot of work, but it can help you become mortgage-free sooner.
2. Keep it in the family
Multi-generational family homes are becoming more popular, and this is a great way to be able to afford to own a detached house. You can provide accommodation for aging parents in the form of an in-law suite, and they can help to shoulder some of the costs of owning the home. There are other advantages to this arrangement: You can look after your folks, and if you have kids, your parents can serve as a built-in babysitting service on date night. And if you’ve got grown children, don’t be so fast to push them out of the nest. Instead, invite them to remain at home, or to move back in following post-secondary school – as long as they pay rent, of course. Think of all the family-bonding opportunities you’ll have with your parents and kids living under the same roof!
3. Divide the house into a duplex
Another solution for being able to afford a detached home is to go in on the big purchase with family members, and then divide the house into a duplex. Bear in mind that there are some bureaucratic hurdles currently standing in the way of this being a viable solution. That’s why it’s high time our government leaders tweaked existing bylaws to allow for homes on traditional 40- and 50-ft. lots to be built or retrofitted into internal duplexes. Then, that 3,000-sq.-ft. $1-million-plus home becomes a 1,500-sq.-ft. duplex, along with basement storage, garage space and a yard – the detached-home dream.
Debbie Cosic, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for over 25 years. In2ition.ca