Although the generational divide between Gen Zs and, well, everybody else has always seemed cavernous, it turns out that the dream of homeownership is actually something we all have in common. According to a new generational trends report by Mustel Group and Sotheby’s International Realty Canada, 80 per cent of urban Canadian generation Z adults expect to purchase their first home within the next ten years.

With that said, only 41 per cent of gen Z respondents anticipate that they will own their first home in full. Conversely, 24 per cent expect to co-own with family and 13 per cent expect to co-own with friends or other non-familial parties. The report also notes that those living in Toronto and Vancouver are more likely to employ one of the latter financing structures – a direct indication of the chronic lack of affordability and escalated cost of living in those markets in particular – with 26 per cent of Toronto gen Zs expecting to co-own with family and 12 per cent expecting to co-own with friends or non-familial parties.

“This is something that is relatively new,” says Don Kottick, President and CEO of Sotheby’s. “You can go back five, ten years ago – when people bought a home, you usually bought it for yourself, you bought it for your family. And I think, as a result of the affordability issues that have come about, it’s caused people to be creative on how they’re going to finance these things.”

For Eyal Rosenblum, the idea to co-own with friends was born out of a desire for community rather than affordability. “We had this plan to do co-ownership since we were teenagers with our lifelong friends,” he said. “As we grew older and began to build our families, we realized we could support each other through that whole journey.”

Two years ago, Rosenblum said they made the plunge and went all-in together, purchasing a fully-detached triplex in Toronto. He and his family live in one unit, his friends live in another, and both couples share the basement.

Rosenblum said the group wrote up and signed an agreement, covering everything from day-to-day ownership and what to do when or if one party wants to sell. “It takes a tremendous amount of trust because no agreement that you make between people can fully capture every little thing that might happen, and you’re effectively stuck with that person in a way that might be really challenging in the future,” he said.

Rosenblum now works as the chief operating officer at Ourboro, a professional co-ownership company that was established in 2019. The company invests up to $250,000 to pitch in on a 20 per cent downpayment for prospective homeowners, providing a shared ownership structure for buyers interested in co-ownership but not interested in sharing the property with others. When the owners decide to sell, whatever percentage Ourboro pitches into the downpayment is the percentage they earn from the sale.

Financially, Rosenblum said that companies like Ourboro might be a better option than a more traditional co-ownership plan such as his. “If the primary reason you wanted to do this was economic, I wouldn’t recommend that to anybody,” he said.

While the Sotheby’s report studied the trend of co-ownership among gen Z, Alex Kjorven, chief product officer, said much of the interest they’re receiving from homebuyers is those in their mid-to-late 30s. “They’re people with young families, who have lived or rented for a period of time, and they’re relatively comfortable doing so. But then their families are growing, and then they decide it’s time to get into that quote unquote starter home,” she said.

Ourboro requires homebuyers put in a minimum of 5 per cent of the downpayment on their own, so the company will contribute anywhere from 5 to 15 per cent. A purchase price of $1 million or more requires a minimum downpayment of 20 per cent. That can be a lifesaving amount for prospective homebuyers trying to enter the market.

The average home price in Toronto reached $1,299,894 in March according to the Toronto Regional Real Estate Board, which would require an average downpayment price of over $250,000 in Ontario.

“This really comes back to the government not addressing the chronic undersupply of our housing stock,” Kottick says. “And that’s why we’re seeing the gen Zs look for creative ways to finance their home. Because of this chronic undersupply, prices keep going up. Until we tackle the supply issue, we’re going to have these affordability issues.”

Kottick adds that the onus is on all levels of government to expand the housing market in a manner that can keep up with Canada’s ambitious immigration targets and growing population, while lowering the financial barrier to entry for younger generations.

In the meantime, gen Zs are not only wise to the state of the housing market, but are actively preparing for it. According to the report, 70 per cent of gen Zs in Toronto plan to fund their first down payment with personal savings. Respondents also expressed willingness to take on a higher-paying job or second job, reduce personal spending, live with family, and delay having a child in the hopes of making their homeownership dreams a reality.