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You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.

ROMA: We’re back with another episode about housing. This time, we’re looking at multigenerational living. That’s basically a way to afford a home in an expensive market. But how does it work? And is it a viable solution to Canada’s housing crisis?

Welcome to Stress Test, a Globe and Mail podcast, where we look at how the rules of personal finance have changed in the pandemic, for Gen Z, and Millennials. I’m Roma Luciw, personal finance editor at the Globe and Mail.

ROB: And I’m Rob Carrick, personal finance columnist at the Globe. We started putting this episode together to look at some of the housing arrangements people were coming to to get by in the pandemic, Some people were losing jobs, houses were screaming higher in price and people were being priced out. And we did a call-out to ask people, what do you see happening? Do you see parents moving in with kids, kids moving in with parents? Roma, what did we actually find out? What was the real story underlying all of this?

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ROMA: Well, I was surprised when we started getting our e-mails from readers from listeners. One thing that was coming in consistently was that families, young adults and their parents were looking at ways to combine living expenses. So remember, the pandemic has left a lot of people without work. It’s really squeezing people, people are having a hard time buying that starter home finding an affordable way to live. So what a lot of people are considering, what we were hearing from them, was that they are looking at moving back in with their parents. Now, Rob, we did an episode in season one, where we looked at adult kids moving back in with their parents - tell us how this is different.

ROB: Okay, there, it was sort of an emergency situation. The young people had jobs in the pandemic, they lost them, they couldn’t pay their rent. And so they had to move back home with their parents. That was playing defense, we’re talking about playing offense. Now we’re talking about a collaborative way of moving in together, living in the same property, it could be the family home, but often, it is a completely different home where multiple generations of the family live together, usually three generations -- children, their parents and the grandparents as well.

ROMA: Okay, so this isn’t new, obviously, in many communities around the world, certainly in Canada, this has always been something that some families do. It’s obviously more common in bigger cities in Canada, where a lot of newcomers will settle. And because the price of housing is higher. It’s hugely advantageous, because you cut your housing costs, not only in terms of purchasing your home, but also in terms of your daily upkeep and your bills and that kind of thing. There are other advantages outside of financials and what are some of those?

ROB: Well, there’s some advantages in terms of breaking down the duties of running the house. There’s daycare for kids, there’s elder care for elders, there’s passing on of traditions between grandparents and kids that might not otherwise happen. I think it’s worth pointing out that it’s actually a trend in Canada, a quiet but noticeable trend, between 2001 and 2016. Statistics Canada tells us that multi-generational households rose the fastest of all household types in Canada at 37.5%.

ROMA: I think what we’re seeing now is a shift towards people that might not have been considering this setup, that are definitely -- it’s on their radar. And it makes sense. If you can’t get into an expensive housing market, this is a way in. Is this going to be something that’s for everyone? I don’t think so. But it is something that bears looking at. And what we’re hearing from, in terms of our listeners and our readers is that more people are considering it.

We wanted to hear from a family that decided to go for this type of setup, and find out what it’s been like, the good and the bad. We found a family that moved in together. grandparents, parents and kids into a house they designed. We’ll hear from them next.

PRE-ROLL: This podcast is brought to you by CPP Investments. Take comfort knowing the Canada Pension Plan Fund will be there for you. We invest to help ensure the CPP fund remains resilient over the long term, sustainable and secure for millions of Canadians. Learn more at CPP Investments Dotcom.

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ROMA: When we did the call-out for this episode, we heard back from Sue. Sue recently moved in with her son Aaron and his family in a house Sue designed and that both families built together just outside of North Bay. We called both of them to talk about that experience.

SUE: Hi, I’m Sue and I’m just recently retired registered nurse.

AARON: Hi, I’m Aaron. I’m a program manager. And I’m 42 years old.

ROMA: North Bay is a small town about three and a half hours north of Toronto. Sue and her husband who works in construction have always lived there. But before they came to this setup, Aaron and his wife Marcella, were living in Toronto.

AARON: Before Marcella and I moved to North Bay. We lived in Toronto, and yet we were middle class. We made about $70,000, $80,000 combined a year. We’re trying to figure out where we’d want to go to start our family. We had no kids at the time. And one time we were up at my parents place in North Bay for Thanksgiving. We obviously traveled to North Bay many times for, you know, different holidays but on the way back from this one, I kind of threw it out there that what about North Bay as a possible place to raise a family, as the agency that I worked for was also in North Bay? And Marcella said she’d been thinking the same thing. We started kind of trying to plan from there.

ROMA: They didn’t all move in together right away. But there was a plot of land available right across the street from Sue’s house. So Aaron and Marcella bought the plot. And that’s where they built their first house in North Bay.

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AARON: It was 2014, when we decided to move to North Bay. My parents owned a lot across the road from where they currently live. So we had made a plan for us to build on that lot. So that we could be really close, we knew we wanted to be close, if we were moving up, at that point then, we had one child. So we built our home there. And that cost back then around just over $400,000 to build that home.

ROMA: Meanwhile, Sue and her husband had bought and sold several times in North Bay. And through all that buying and selling, they found themselves in quite a bit of debt.

SUE: All in all, I think we were taking like at least $200,000 of debt with us from one property to the next. You know, closer as I got to retirement, I didn’t want to have that kind of a debt load. I wanted to, you know, be free of the mortgage.

ROMA: Aaron was also looking to move to cut down on his commute.

AARON: I ended up getting a permanent job in South River, which is a 45-minute drive on the highway. So not like a 45-minute Toronto drive, but a 45-minute like, you’re going 110 the whole way. And so that’s a lot of kilometers to rack up on your car. I did that for a year. And kind of knew I didn’t want to do that anymore.

ROMA: Aaron saw that his parents were in this debt, and that they would have to downsize. And he wanted to move his family to be closer to work. But they didn’t want to lose out on being close to his parents. So he had an idea. What if they bought a plot of land and built a house both families could live in?

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AARON: So we really loved living across the road from my parents. And we knew as mom neared retirement, that the property taxes there were too significant for what she’d want to pay when she’s on her pension. And that got Marcella and I talking about it, well, if they move off this road, like maybe we should move to town too. And I’m like, well, then we’re giving up kind of like a little dream home like a really nice kind of “cabin in the woods” feel and we weren’t going to be able to replicate that in town. So I think, just living across the road for all those years, I was kind of like, Well, what about pitching the idea of doing something together? Where financially it’s a big win for both of us. Mom and dad won’t have to downsize so considerably. My dad also, he’s got a big shop, right? Like a shed. And that’s very important to him, like, very, very important to him. So this was just a situation where both families could continue to thrive and not necessarily feel the crunch of “downsize” while getting rid of a lot of debt.

ROMA: He took the idea to his parents, and they loved it.

SUE: It’s really funny, because I think it was Aaron that came up with it. But you know, we, you know, started discussing it. And it just felt right. Like sometimes you have to go with your gut feelings. And even with my husband, he said, you know, funny, it’s just, it just seems right.

ROMA: So the family started looking and they found four acres of land just outside of North Bay. They bought it before the lockdown in March 2020 and started working on it right away. Aaron’s dad built the house. And by the beginning of 2021, both families had moved in.

AARON: We came across just a beautiful four-acre parcel. That again, both families went and checked out and just loved it. So the building process, it really started there in 2020, we purchased that land, and that was about, just under $50,000 for the four acres. And were in the home in January of 2021.

ROMA: Sue designed the house, she considered what Aaron, Marcella and their two young daughters would need on their floor in addition to what she and her husband wanted to have in their own area. Both families have their separate spaces. They don’t share any part of the house except the outdoor space.

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SUE: The way I designed it was so that I was very particular on where the kids’ kitchen was going to be, you know, where my kitchen was where the bedrooms were placed above one another. I took into consideration where that noise was going to be. And, so then we had two type of heating systems put in so that the duct work and stuff wasn’t running from one unit to another. So that, to lessen the sound traveling back and forth from unit to unit. We put extra sound barrier in between, and they’re, you know, nine foot high ceilings, and, you know, you kind of had to take a lot of that stuff into consideration and putting it together. And it’s, it’s worked. I mean, yeah, of course, the girls will run across the floor, but it’s like, you know, not a big deal. I have three little dogs, and sometimes they’re, you know, noisy. So it balances out.

ROMA: So far, the setup seems to be working great for both families, both financially, and in terms of being able to have Aaron’s kids near their grandparents.

SUE: Just having the grandchildren. I mean, with what we’ve gone through this pandemic, I have not been forced to be separated from, you know, a couple of my grandchildren, at all. It’s been wonderful. And you know, they all think sometimes come in the morning and, ‘Can I have a little visit. I’ll just be five minutes, Gramma’, it’s like, yeah, yeah. [LAUGHS] It’s like, what’s in your fridge? [LAUGHS] It’s, it’s awesome. I mean, if Marcella needs to step out for you know, like, a few minutes, or go in to town to get something like, I’m here. I mean, it just doesn’t get any better than that.

AARON: Yeah, one of the main benefits to all of this is the bill splitting. So I compared my 2020 bills in our in the home that we lived in to the bills, like you know, January, February, March, April, May. And yeah, there’s only a $25 to $35 difference, like, higher -- but then we split that bill. So it’s a phenomenal savings. Internet out here is about $130 a month, split that bill - $65 a month. It’s far easier to absorb just the day to day bills. Property taxes in North Bay, where we were were really high like combined, we’re paying like, upwards of like $15,000 a year. And now if that number, we don’t know what our bill will come in here. But Powossan taxes are a little bit better, but the house and land is also bigger. So even if that number comes in at $7000, but you split that, you get $3500. Like, that’s a significant, significant amount of money to get to keep.

SUE: Just being able to pay my bills without a mortgage. It was a massive stress relief for me. Taxes in North Bay were just too -- for me, they were astronomical. And looking at it realistically, if I had to, you know, something happened to my husband who doesn’t have a pension, if I had to carry the load, there was no way I would be able to do that. So coming out of that, and being able to share half this burden, and then you know, not having a mortgage. It has been very freeing for me.

ROMA: So what have been some of the downsides?

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AARON: Yeah. So, you know, as far as kind of butting heads or whatever, there hasn’t really been any of that. But one of the things that was nice was, again, living across the road from each other. Kind of, we both know what we were getting into, like my parents have seen how I upkeep my lawn, and it’s not to their standard, you know, and I know, I know what their standard is and that what it means like that I’ll be spending a few extra Saturdays doing things that I didn’t want to do on a Saturday. And that’s just gonna have to be how it is. So it’s you have to know your kids and you got to know your parents and understand that it is a little bit different than that independent family dream of, you get to do everything your own way all the time. Where something’s gonna go or whether someone likes or doesn’t like a piece of patio furniture, those can be areas of contention, so you do have to be able to talk and work them out. But we haven’t really had any, mind you, we’re pretty early too, in the landscaping phase. So but we talk it out like we do have meetings where the four of us will get together and be like, so this is what we’re thinking of doing. What do you think?

SUE: Just this past week, I’ve been toying with an idea of putting a pool in, do we put a pool in? Well, if we put a pool in, we’ve got to cover it somehow, because we have too many bugs, and you want to use it for, you know, more than three or four months. And then the kids came back and they said, no ma, we thought about it. We just really don’t want to pay the extra for insurance and the upkeep, and we don’t want to be dumping on you. So it’s like, alright, well, that’s fine. I can live with that. I guess I get a hot tub. And it will stay on my side of the house. [LAUGHS]

ROMA: This all sounds great. Both families seem happy with the setup, they have an open line of communication to deal with any differences or problems as they come up. How did they sort out the legalities? What happens if one of the parties wants to sell?

AARON: So Marcella and I purchased the land, so the land was in our name. And for general contracting purposes for the build, even though my dad was building it, a lot of the bills were put back on me as the general contractor to take care of, and then we would just figure that out together. So yeah, everything started off by being in our name. And we did throw around a couple ideas on what was going to be the best way to figure out the finances. Would it be that my parents would pay this large sum of money that would be considered like, 25 years of rent? And, or, or do we figure out how to get both parties on the title? And at the end of the day, we both decided that it was best to go to the lawyer and have my mom added on the title as a 50% owner of the home. So Marcella and I are 50% and my mom the other 50%. We kept Dad off for his business reason. So now yeah, if we’re in a situation, if I need to take a job in Vancouver, you know, my parents can’t buy me out. So we would be in a situation to sell. And the way it’s written up with the lawyer is basically, if either side wanted to try and put up a fight and try not to sign sell, they would lose because it’s written in there that that’s allowable. So it’s best to just figure out what our plan B would be. Obviously, we love each other enough that no one’s going to do it in a way to like, leave the other person high and dry.

SUE: I’ve always lived my life, having Plan A but also having Plan B. And I’m pretty flexible. And I’ve always said to Aaron, like, if some opportunity came up and it you know, for his career, and he needed to move whatever, I don’t want this being a ball and chain. I mean, my husband and I, we can do this again. And you know, I have a couple other sons too. So yes, we did go to the lawyers, we had a lot of chats on how this was going to work, and that it’s going to be fair for everybody. And we’ve worked that all out legally. And we all feel good about it. My other sons feel good about it. They have no, you know, hesitation about or apprehensions about what we’ve done here. I mean, they’re comfortable with it, and we trust each other. I guess that’s the big thing. We we’re all on the same page.

ROMA: What advice does Aaron have to families who are considering this?

AARON: In order in order to make this really work, I think you really have to have a decent understanding of what it is that you really need. Like what are your non negotiables and what things you can negotiate and make sure that both parties can be on the same page with respecting the non negotiables and working with the negotiables. There’s also not a ton of homes that are set up like ours, like probably, yeah, very, very little right? Like I don’t, I don’t think we could do this. I’m pretty certain we couldn’t do this if we were sharing a kitchen. Right? So that would take a special family. I’m sure there’s people out there who can do it and you know, all the best and all the power to you. But you really do at the end of the day need certain spaces that are your space. At least that’s how we feel on both sides. So we made sure we did it right. And unfortunately, I guess that means like for a lot of people I’d say like if you’re got to try and get out of the city where you have a little bit more space to build what you want because retrofitting would be a nightmare.  So I really hope that other people will consider looking into these multi generational homes, I think there’s a great value there for generations to come, both financially and in the quality of life that you get by getting to know your grandparents and own parents that much better. There’s one thing to be raised by your parents, you know, and you know them as a kid. But it’s a really cool thing as an adult to get to know your parent in a different way.

ROMA: Thank you to Sue and Aaron, for sharing your story with us. Rob, what did you think of their setup?

ROB: Super smart, you know what, practical, it solves a number of problems. I think that, provided they all continue to get along, it’s going to continue to be a great arrangement -- there’s going to be daycare there’s going to be elder care for as the parents age, could be a model for a lot of people all across the country. What about you?

ROMA: One thing that struck me about their setup that I really liked is that they went into it with open eyes, they planned it out, it wasn’t an afterthought. Big difference to me also seemed the way that the place was arranged with them having separate and private living spaces, so they can congregate when they want, but they can also shut the doors and have their own space when they want that. And I suspect that will go a far way towards making this setup successful.

ROB: I also credit them for thinking long and hard about the legal agreement that will govern this building. What is so important, even for families who get along great. There can be a lot of stressors with close living. And you cannot even think about doing this without getting a lawyer involved, I think and they did and so good good for them.

I talked to two experts who have looked at multigenerational housing. They have pretty interesting things to say about what it can look like in Canada. We’ll hear from them next.

MIDROLL: This podcast is brought to you by CPP Investments at CPP Investments. We never lose sight of the long term. We invest the Canada Pension Plan Fund to help provide financial security for generations of Canadians. We diversify the CPP fund across geographies and asset classes to access the best investment opportunities and generate sustainable long term returns. The fund is now more than 400 billion dollars. To learn more about our investment performance for Canadians, visit CPP Investments. Com.

ROB: I spoke with Murtaza Haider and Stephen Moranis about what multigenerational housing looks like in Canada. Murtaza is a professor of real estate management at Ryerson University and the director of the university’s urban analytics institute. Steven is a real estate consultant.

Roma and I touched on this a bit at the start of the episode, but what is multigenerational housing? How is it defined?

STEPHEN: You know, multigenerational families and we’ve done some research and written a column on it, basically has to be three or more generations. So it would be parents, children and grandparents, definitionally.

ROB: How common is it in Canada? We hear a lot of stories about it. And I think the media loves to latch on to these stories, gives a very heartwarming solution to the problem of expensive housing for everybody, even people who already own houses find it expensive to keep up. But how often is it actually occurring?

MURTAZA: Yes. So essentially, we were looking into data from Statistics Canada. And our intent was to see how living arrangements could be one way of improving affordability. And one of the interesting data sets that we got hold of was looking at multi-generational households. And what we observed is that there is quite a prevalence of such living arrangements in some parts of Canada. They were parts of Vancouver, and the Greater Toronto Area, where such living arrangements were more common. So much so that in Brampton, one in four persons lives in a multi-generational household as per Statistics Canada’s data.

ROB: I want to get your gentlemens’ comments on the real people we found for this episode. What are your thoughts on Aaron and Sue’s arrangement?

MURTAZA: Yes, I think this is the right way. So they’re looking after the legal side. But I think North Bay does not have the kind of housing affordability challenges that you find in Vancouver, Toronto, and now in places like Hamilton and Halifax. So they have done the right way of doing it. So if people are looking at the places where the price of land is relatively much cheaper than the price of land in urban settings, then you have this very good option of building something from scratch. The cost of construction may be slightly higher than building it in an urban context. But still it will give you plenty of space.

ROB: Stephen, what would you do to make multigenerational housing more appealing to people to make more people consider this option of getting into the market?

STEPHEN: Well I think it’s got to come from the grassroots. So it’s got to be you know, the sellers’ real estate agents, who are promoting and marketing properties that it’s a viable alternative for prospecting for these kinds of properties are you know, multigenerational families. And no one’s really kind of done that or gone out there in an innovative way to put the message out to say, hey, this house could be great opportunity. And there is some customization you can do, I mean you can always put a kitchen in the basement. You know, forget about completely gutting a house or building brand new, which makes it a lot easier to lay it out but you know, there is some customization that can be done. And you know, a lot of the multigenerational housing features, especially, say for the grandparent generation, are going to need maybe main floor master suites or bedrooms or you know, because they can’t go up the two stories or three stories if it’s a three-story house. So I think it’s got to come from the real estate industry, the real estate professionals, the developers who, some of them are catching on, and they’re doing it for more from an affordability point of view.

ROB: I want to get some advice from both of you in closing on what to do if you’re, if you’re considering multigenerational housing? What advice do you have for people who want to put this in motion?

STEPHEN: Well, I think the fact is, there’s lots of problems with family disagreements with respect to inherited property. So you’ve probably heard this story, you know, a family has a family cottage in Muskoka. And then all of a sudden, you know, the parents die and the kids are inheriting it. And they don’t have any sort of agreements in place - buy, sell, common use, common maintenance, etc, etc. And, you know, it becomes a real sort of, unfortunately, family sore point. You know, because the person who wants the cottage feels it’s worth less, and the person who wants to sell it, this sibling feels it’s worth more. So, my best advice would be, it’s like a marriage contract. You’re going to get married, you know, you should have some agreement. And if you’re going to sort of venture into a multigenerational family, that you should have some agreement on the financial side, if you know how you finance it. If someone chooses to sell, is there a buy sell arrangement? You know, how do you cover the costs of, you know, expenses, and taxes and maintenance and all those things. So, the broad simple advice is you should write out an agreement on all the what ifs, if come maybes, and probably both of you get independent legal advice and put something in place.

ROB: Murtaza, what thoughts do you have for people who are considering this?

MURTAZA: As Stephen mentioned, treat it as a marriage contract, because the grandparents may get divorced, and they remarry, and this will all be happening under the same roof. So you really have to think of all the clauses and circumstances, so having a legally binding agreement would be far preferred than just having parents saying, Oh, my parents are helping me. So we’re going to do this. So I’m with Stephen on this. It has to be has to be done legally, and in the binding way rather than just goodwill of between parents and children.

ROB: Stephen, Murtaza, thank you so much for your time this morning. It’s been our pleasure. Thank you.

ROB: Those were Murtaza Haider and Stephen Moranis. You can look at their work on www.hmbulletin.com.

Here are my takeaways from this episode.

  • If you’re priced out of the housing market and get along with your parents, a multigenerational home might be the answer
  • Getting a legal agreement drafted by a lawyer is a must get all the terms of your arrangement down on paper
  • Consider the additional value of multigenerational homes. Shared daycare and eldercare shared home upkeep and maintenance and tighter family ties.

ROMA: Thank you for listening to Stress Test. This show was produced by Latifa Abdin and Hannah Sung. Audio post production by Kyle Fulton and Carlay Ream-Neal. Our executive producer is Kiran Rana. Thank you to Aaron and Sue in North Bay, Ontario, for sharing your story with us.

ROB: If you like what you’re heard, let the world know. Leave us a rating and review at Apple Podcasts. And if you know someone who wants to stay on top of their finances, send them this show. Our next episode is the final one of the season. We’ll be talking to three Gen Zs and millennials about their experiences with investing.

ROMA:You can find Stress Test on Apple Podcasts, Google Play, Spotify or your favorite podcast app. You can find us at globeandmail.com where we cover all things financial and all things housing. Thanks for listening.

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