British Columbia has a particularly high prevalence of buyers buying properties in groups of three or more, according to a recently released data set from the Canadian Housing Statistics Program, part of Statistics Canada. Newcomers to Canada are particularly active in purchasing high-end real estate as a group.
“We were very interested to find out that [group buying] is correlated with high-priced markets, such as British Columbia, ”said Jean-Philippe Deschamps-Laporte, director of the CHSP.
These aren’t multigenerational partnerships, he adds, like when parents help their kids enter the real estate market by adding their name to the title. These are people with a median individual income of $ 48,200 who buy in groups, bringing their median total income to $ 174,000. Data is based on a review of buyer behaviors in British Columbia from 2018, the most recent set available. The report includes differences by gender, number of buyers in a sale, type of family, first time buyers and immigration status.
“They aren’t necessarily high income people, but together once you add up the income for that group it leads to a higher total income than those who buy in pairs,” Deschamps-Laporte said.
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Ryan McKinley, senior director of mortgage development for the Vancouver City Savings Credit Union (Vancity), spent most of 20 years working in the lending industry, and about 10 years ago they started offering ” mixed mortgage loan ”, specially designed for collective ownership. This product was created in response to residents of Vancouver entering into condominium deals on their own, due to soaring house prices. Condominium mortgage loans have only grown in popularity, with both related and unrelated people.
“I don’t have specific numbers on the increase, but for the record, we get more and more inquiries over time. Out of necessity, many people have a goal of homeownership and as soon as they realize that it will be difficult on their own, they start looking for other ways to afford it, ”McKinley explains.
The most common fear around condominiums is that the parties not only share title to the property, but the mortgage as well. While they may each have separate mortgage terms with the mixed mortgage, such as their amortization period, each is responsible for all of the debt. It can become a problem if a person loses their job or gets sick. Although he has seen deals end due to divorce, McKinley has not seen a condominium collapse because one party has stopped making mortgage payments.
“Personally, I’m not aware of these things, but I would generally be made aware if something like this happened, and I haven’t seen it,” McKinley explains. “You also have more people involved than if you had only one person on the mortgage, where everything relies on that one person. When you are a co-owner, there are several people, so even if something does happen and one person leaves, there is often more financial strength in a group.
And even when people got divorced, these condos managed to get by, he says.
“Dissolving a marriage is something that gets discussed at first anyway, but even if it isn’t, that’s when we get together and work it out. In the last situation, we were able to do this so that the other spouse could be redeemed and the remaining spouse took over. We had to tweak things and so on, but it worked as it should. “
The condominium mortgage is one step in the process, and a legally binding condominium agreement is the other. And because coachers are tied to each other’s situation, that means they should have appropriate insurance coverage as well, McKinley explains.
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“A lot of people ignore this, but it is especially important when talking about relating financially to related or completely independent people to make sure that everyone is properly insured… it is important that everyone is on the same. wave length. “
Condominiums generally fall into three categories, he says. There are traditional partnerships between parents and their adult children, where parents usually do not live in the same house but act as investors.
“Because the down payment is a big investment now, rather than just giving their kids a big down payment that family members have together, which gets the kids into the market and is also a potential investment for them. the parents. So that’s what’s happening.
The other category is friends who get together, like two couples buying a house or duplex or two singles buying a two-bedroom condo. And then there are unrelated people who buy properties. Some of these condominiums can be found on the Multiple Listing Service (MLS), where a party sells their share of the title. McKinley is currently working with such a purchase, where three unrelated people had long been co-owners and one of whom now wanted to sell.
Not all situations are suitable for co-ownership, he adds. For example, it is not a mortgage designed for large groups of 15 or 20 investors. In that case, they should probably form a corporation, he says.
Condominiums are particularly popular with immigrants, who pool their resources and purchase properties that are generally more expensive than those purchased by groups of non-immigrants with the same income. Immigrant coachers often buy in urban areas where property values are higher.
“As we see this trend [for group buying] to be more prevalent in British Columbia, this is particularly the case for immigrant buyers, ”said Deschamps-Laporte. “And that’s the very interesting angle. There is a lot of talk about immigrants and their roles in the housing market, and about the choices immigrants make which are sometimes different from those of non-immigrants.
“And ultimately, what this tells is in part a story of integration, of a preference for brick and mortar over other types of financial assets.”