Property 2.0: Hacks for young people and first-time buyers to become homeowners in Québec

Robert Landry, Real Estate Broker (Residential and Commercial) EXP Agence immobilière

In the current real estate market, although the game sometimes seems to belong to those who became homeowners before the price spike into which the pandemic has plunged us with no apparent way out, due to the interplay of supply and demand, is there hope for those we call first-time buyers, particularly these younger clienteles who often come up against a brick wall?

A little reflection in a few ideas and concepts, outcomes that give hope, but which perhaps require a change of paradigm and culture.

The classic model may have changed. It reminds me of a former European immigrant owner who explained his arrival in Quebec. In our country – as in the North American mentality in general, we were accustomed to the model “you have a job, you get into a relationship, you buy a home with a nice yard, you have space, a dog that runs, a lawnmower, a snowblower” and the dream came true. My European landlord had all that, but not at the beginning. An old triplex that he renovated, shared with the rest of the family who arrived, we crammed in. Not the great luxury right away. Ten years later, a 6plex, 3 triplexes, and finally the beautiful large single-family home with the large yard and the dog, but always with the passive income from his plexes (and maybe others, we lost touch since then).

I have always admired his story, which left a mark on me and whose broad outline I am sharing with you. In part, it is this story that inspires this reflection in the current market. What we have been experiencing in Quebec since 2021 on the theme of soaring prices, Ontario (particularly Greater Toronto) and British Columbia (particularly Greater Vancouver) have been experiencing for decades. It has been said for at least two decades that the only way to access property in these places was to inherit from one's parents.

But fortunately, there are different avenues.

Co-purchase of real estate

Inspired by European models, co-purchase allows several people (friends, family members, or even business partners) to become co-owners of a property. The initial down payment and other related costs (notary, the indecent welcome tax in particular) are then shared, but also the current and maintenance expenses. The challenges are obvious: a good understanding and a clear distribution – ideally written – of responsibilities are required.

Intergenerational purchase Also very common in Europe (much more so than here), this model consists of buying a fairly large house (typically with two separate entrances) where parents and children will live together. Here again, good family understanding is a condition and the challenge of privacy, depending on the divisions and the structure, can be greater. But reducing costs for young people with the financial or logistical collaboration of parents is often a plus that compensates. However, the constraints imposed and property taxes can become a burden the day parents can no longer live there. And resale is often more difficult, addressing a more restricted market segment that could nevertheless gain momentum in the coming years.

Splitting the purchase

Consider buying a duplex or triplex where the income from the other units covers part of the costs – and if you don’t need the large, profitable unit right away, a small sacrifice can make the deal even more feasible. The fact that the plex generates passive income makes it easier to repay the mortgage and pay taxes. Of course, you also have to consider the challenges of rental management and additional maintenance.

You might think: “but is a duplex or triplex realistic in today’s market?”

A $400,000 duplex has become rare in many regions of Quebec, especially in large urban centres like Montreal or Quebec City, where prices have risen sharply, often between $600,000 and $1,000,000. However, it is still possible to find duplexes in this price range in some regions far from these major centres, including: Mauricie (Trois-Rivières, Shawinigan), Bas-Saint-Laurent (Rimouski), Saguenay-Lac-Saint-Jean, Estrie (Sherbrooke, Magog).

On the outskirts of Montreal or Quebec City, some municipalities still offer more affordable prices, but often for properties requiring renovations. It's time to learn to do DIY, but be careful with permits and don't get involved in specialized trades unless you are qualified to do so (in the event of a resale, having played electrician or plumber for major things could cause doubts in a buyer). Smaller duplexes or those with lower quality units can also be less expensive.

I will not go into the government incentives of Québec and Canada which are well covered in multiple articles: the Home Buyers' Plan (HBP) allowing the withdrawal of funds from your RRSP without tax penalty, the TFSA, certain tax credits via other programs.

Conclusion

Starting to think about less individualistic models – like some observed in Europe – could transform practices and the real estate market itself. The financial strategies that these models underpin also require a cultural change that favors collaboration, but none of these models can be considered blindly. Trust, good understanding, understanding of what each agreement implies, the solidity of the partners in a project, are important elements. Indeed, the failure of a partner or a disagreement could compromise the security of the acquired asset.

References:  

Guide to Co-Buying a Home with Your Friends

Should I Buy a House With Friends? (Centris)  

Purchase and Sale (Undivided Co-Ownership) (Chambre des notaires du Québec)

What do you think? Do you have other approaches or experiences to share? Comment below.

Coming soon: Building a real estate portfolio in 2025 for a beginner