In 2000, I finished my studies. Three years later, I bought my first house outside the greater area of Montreal. The selling price for the 1600 square foot bungalow was approximately $150,000. Then, we moved in the Ottawa/Gatineau region. We sold the house in Montreal for $275,000 and bought a new home in Aylmer for approximately $250,000. 

Our neighbors are in the process of selling their house and the asking price is approximately $900,000. In my opinion, the real estate market seems to be completely overheated. Obviously, the “Boomer” generations and that of my generation “X” have benefited from the increase in real estate. I’m sure we all appreciate these increases, and we are all thankful to be invested into this asset class. 

Notwithstanding our newfound fortune, longer term, this predicament creates wealth dislocations and other issues for future generations. Therefore, the question I was asking myself, what’s the “game plan” for future Generations? Should we rename them, perhaps generation “D” for Mortgage indebtedness?

Joking aside, here are some financial and tax solutions that may help you. First, these opinions are purely academic. I encourage you to consult either a financial, tax or real estate professional. Ideally, a combination of the three professionals mentioned. If you need a reference, please contact me directly. 

1) I haven’t read Fabian Major’s book @fabianmajor yet, which is entitled: What are you going to do with all this money? However, as I mentioned to a relative of mine, it is impossible for “boomers” to bring their balance sheet with them to the “paradise of heaven”. So why not help your children in your lifetime? 

2) Notwithstanding my comment, mom & dad love you very much and they’ll be more than happy to accompany you in your first real estate venture. Believe it or not, it is possible for them to make an interest-free loan or a donation with no tax consequences. 

3) Renovation. If your parent’s home is large enough, renovations can be made to accommodate a private location. Also, if they have a fairly large land plot, you may be able to consider an intergenerational home. 

4) Teleworking. The nature of jobs is changing. Why not look for a job that will allow you to work from home. The advantage of working from home is that you can live anywhere. 

5) TFSA, RRSP and HBP combination. I do not want to go into details, because each situation is different, however there are mechanisms that allow you to save effectively. In addition, an RRSP loan is another option. RRSP loans offer attractive interest rates. After 90 days, it is possible to do an HBP. There are tax benefits with RRSP and interest rate are advantageous at this moment.

6) If your salary allows, lenders may agree to have the down payment borrowed from the line of credit or as a personal loan. It takes a good salary for the ratios to remain within the lending norms, because the loan for the down payment must be considered within the debt ratios. 

7) The fact remains that there are multiple options to become a homeowner right out of university. Obviously, it’s contingent upon the region you live in. Right now, condos, townhouses and semi-detached which are less than $300,000 are more affordable. It can take as low as a 5% down (15,000$) payment for a $300,000 home purchase. Some properties in question may not be exactly to our liking or necessary in the area you are looking for, but the fact remains that on the substance, home ownership is possible by making certain compromises. 

8) Finally, the purchase of a Duplex or Triplex “owner-occupier” also remains another strategy. As the “owner-occupier”, you can put 5% down payment for a Duplex or 10% for a triplex. That being said, rental income helps lower debt ratios so you can afford a slightly higher purchase cost. Considering the prices of rental housing in the current market, it is possible in some cases that it is less expensive to be a homeowner than a tenant.