Amid housing crunch, an embrace of multigenerational housing

As Canada grapples with an acute shortage of housing, some residents are embracing a shift toward multigenerational housing.

This phenomenon, which includes multiple generations of adults living under one roof, is being driven in no small part by necessity as younger buyers and new arrivals to Canada search for a place to live, only to encounter escalating prices and decreasing inventory.

Mortgage rates are at multidecade highs. Last month, the Bank of Canada held its overnight rate at 5 per cent and warned that future hikes may be necessary to tame persistent inflation. 

Although home prices are expected to level off in the months ahead, affordability for prospective homebuyers is not expected to improve because of stricter lending requirements and historically low housing supplies relative to rising housing demand.

In response, some buyers have joined their in-laws, their parents or other family members under the same roof.

Demand is rising …

Through this squeeze, the sentiment around owning a home in Canada remains high. Close to 80 per cent of respondents to a 2023 Mortgage Professionals Canada survey viewed real estate as a “good long-term investment.”

Indeed, the need is growing. Canada is embracing the arrival of immigrants as it confronts a shortage of labour. Canada aims to welcome from 410,000 to 505,000 new permanent residents this year, from 430,000 to 542,000 next year, and 442,500 to 550,000 in 2025, according to the Immigration Levels Plan for 2023–2025.

And that’s just the official count. CIBC data published in August suggests there was a 1.5 million undercount of Canada’s 2023 population when nonpermanent residences and people who overstay their visas are factored in.  

… but the supply is limited

The latest Housing Supply Report by the Canada Mortgage and Housing Corporation concluded that the level of new construction is too low to address the long-term housing supply gap.

Which leads some families to look to their families for answers. The number of households with multiple generations of adults living under one roof has increased 45 per cent in Canada over the past two decades, making it the fastest-growing household trend in Canadian history, according to 2021 census data.

A survey conducted in August by Royal LePage, a national real estate brokerage, found that 56 per cent of people who co-own a house own it jointly with their parents or their in-laws, while 18 per cent co-own with their adult children.

The multigenerational housing trend, the survey found, is fueled by increasing immigration alongside a lack of affordability in the housing market.

Developers have taken notice. Multifamily units that include multigenerational features like extra bedrooms and bathrooms, in-law suites, and safety features are in demand among some buyers. But permitting and zoning remain an issue for some developers if they are to meet the rising demand.

The takeaway

With Canadian housing costs on the rise, a shortage of new construction and the desire for Canadians to own homes, some Canadians are looking to their parents or their in-laws or other family members to help solve the housing riddle.

RSM Canada’s Michael Whitwell contributed to this article.