Canada’s housing market is notoriously expensive, with homeownership remaining an elusive dream for many of the city’s residents.
However, an innovative housing strategy known as shared-equity housing is starting to become a viable alternative, offering some hope for aspiring homeowners struggling with the current housing crisis.
It’s a powerful tool that could be used to help many Canadians, said Adam Gant, a Victoria real estate expert and an advisor for REAfe Advisory, which assists real estate investment and development companies with growth and strategy.
Gant believes shared-equity housing could be a turning point.
“This model could advance access to equity in our housing market,” he said. “It presents a tangible solution to the affordability crisis, stabilizes communities, and helps create a more equitable society.”
What Is Shared-Equity Housing?
Shared-equity housing is a model that allows buyers to build equity in a home starting with a small amount to begin with rather than having to purchase the whole property up front, dramatically reducing the financial barriers to homeownership.
The remaining equity stays with a housing fund, which subsidizes the initial purchase and shares in the potential risk or reward of property value fluctuations.
According to data from the Canadian Real Estate Association, the average price of a residential property in fall 2022 was $644,643, CTV News reported. That’s an increase from previous years, and the upward trend shows little sign of slowing down — underpinning the urgent need for affordable housing solutions, Gant said.
With shared-equity housing, potential homeowners who were previously unable to enter the housing market can often afford a home.
“Canada needs fresh approaches to housing, and this innovative model reduces the initial down payment needed without making the market unstable like excessive debt would, and often enables participants to live in areas with access to better schools, safer neighborhoods, and more employment opportunities,” Gant said.
A Tough Market in Canada
Critics of Canada’s current housing market claim it is increasingly out of reach for many residents, particularly first-time buyers or other kinds of blended families. One recent poll even suggested that many Canadians have “given up” on ever owning a home.
As a result, shared-equity housing presents a solution to the “rent trap” many Canadians find themselves in — when a significant portion of their income is poured into rent without building equity or ownership.
Through shared equity housing, these residents can invest in their future and gradually increase their home equity over time, Gant said.
“While shared equity won’t solve every housing issue, it is a promising start,” Gant said. “It provides a lifeline to homeownership for those left out in the cold by the traditional housing market.”
Successes and Challenges
Several shared-equity housing programs are already making significant strides across Canada. In Calgary, the Attainable Homes program helps moderate-income households purchase homes, offering down-payment assistance and sharing the home price appreciation to keep homes affordable for future buyers.
But despite its potential, shared-equity housing is not without challenges. Questions remain about how to scale up these initiatives to address the enormity of Canada’s housing affordability problem, Gant said.
Its success will depend on continued innovation, funding, and commitment from both policymakers and the public, or more broad adoption and support within the capital markets, he added.
“But for many Canadians, this model offers more than just a home – it provides a path to stability, security, and a brighter future,” Victoria’s Adam Gant said.