Real Estate Trend: Multigenerational Living

A real estate trend, multigenerational living, is growing in the residential housing market and bringing families together … again!

In fact, Pew Research Center report shows that the percentage of the U.S. population living in multigenerational homes has more than doubled since 1971, increasing from 7% to 18%. This amounts to approximately 60 million people who currently live with extended family members or nearly one in five Americans.

For empty-nester parents, if you are part of this trend, this could mean your college-graduate kids have moved back in with you. If you are a recent college graduate, you might be cohabitating with mom and dad. For mid-life adults, you might be living with and caring for your elderly parents. For seniors, this could mean you have moved back with your kids and grandkids.

If you are not yet part of this trend, it might be a viable option for your family if:

  • Your college graduates are well into their first jobs. But, given economic conditions and big student loans, they cannot afford to rent or buy a home of their own.
  • You are a single parent needing help with childcare.
  • Grandma’s poor hearing and eyesight make it hard for her to live on her own.
  • You are saving for your own retirement and purchasing your own home right now is out of reach.
  • You want the generations of your family to know one another and share their lives together.
  • As an investor, you prefer to use your funds to purchase cash-flowing properties.

More and more people with these types of challenges, goals, and ideals have found that multigenerational living and home ownership is a workable option. In the U.S. and around the world, extended families find that pooling resources makes a big difference in achieving their financial goals and taking care of one another.

This trend is impacting residential real estate and building. According to the National Association of Realtors (NAR), “Multigenerational housing trends are changing the real estate market by increasing demand for larger homes with separate living areas.” They report that 15% of recent homebuyers planned to have multiple adult generations living on their new property.

Many residential home builders are already targeting this market with multigenerational home designs. And, some organizations, like AARP, support developing residential projects around this concept.

With high interest rates, inflation, people living longer, the cost of caregiving, high home prices, and a general need to connect with family, this trend will probably continue. Reports PEW, “There is no sign that the multigenerational household population total has peaked.”

What is Multigenerational Living?

Multigenerational households are people born in different generations (often extended family members) who live under one roof, or in a duplex, or perhaps in individual dwellings with private living quarters and a central space for cooking and gathering.

Economic necessities and reverence for older adults, had made multigenerational living the norm in many non-Western societies such as Latin America, Southeast Asia, and the Middle East.

In the U.S., multigenerational living has fluctuated in popularity over the years. Although historically many families lived together, conditions after World War II helped to change that. A suburban housing boom, less expensive air travel, seniors’ access to Medicare (helping seniors living alone), and an emphasis on children’s independence and other changing cultural trends, led to a decrease in multigenerational living. In 1980, according to PEW, just 12% of Americans shared homes with their extended families.

Since then, the trend has been slowly increasing. The Great Recession (2007-2009) moved it forward and the pandemic accelerated it. According to a report by Generations United, a non-profit whose mission is to promote intergenerational collaboration, nearly 6 in 10 families currently living together say they started, or are continuing, to live together because of COVID-19.

What’s Driving the Multigenerational Living Trend?

PEW cites the current drivers of this trend as financial, cultural, and demographic, including:

  1. Financial and economic challenges
  2. Healthcare costs
  3. Immigration (i.e. families pooling resources while adapting to a new life)
  4. Changing cultural norms
  5. Rising cost of senior care
  6. Delayed marriage ages
  7. Extended educations
  8. Delay of young people forming their own households
  9. Increased student loan debt
  10. Social forces (growth of U.S. Asian and Hispanic Americans, especially immigrants)

People who currently live in multigenerational households cite finances, caregiving, change in relationship status, companionship, and it always being that way for why they choose the multigenerational option.

Who is Buying Multigenerational Homes?

The multigenerational household trend is influencing the real estate market, as many families are looking for larger homes and multifamily units to accommodate extended family members.

The National Association of Realtors (NAR) has been following this trend for some time. In their 2022 Home Buyers and Sellers Generational Trends Report, they find that Gen Xers (ages 42-56) are the most likely to purchase a multigenerational home, with a full 15% of them doing so. Baby Boomers come in second, with 14% of them purchasing a multigenerational home.

Gen Xers are a big driver in the real estate industry. They comprise 22% of recent homebuyers, and they have the largest median income ($125K). Notes NAR, “With this extra income, buyers 42 to 56 purchased the most expensive homes at a median home price of $320,000 and the second-largest homes at a median of 2,300 square feet.”

Realtors find that buyers are purchasing multigenerational homes with adult siblings, adult children, parents, and/or grandparents. They are doing this to take care of, and spend time with, aging parents because children over the age of 18 were moving back, and for cost savings.

Home Designs for Multigenerational Living

Multigenerational living housing options come in different forms. They may include a home with two master suites (or a master and junior master), an apartment-like mother-in-law suite, a detached ADU or casita, a private second dwelling attached to the main house by a covered porch or walkway, or a duplex.

“One of the most important issues for a well-functioning multigenerational household is the physical set up of their home,” notes Generations United. Their survey lists the number of bedrooms and bathrooms as the most important home features. First-floor bedrooms with their own showers can be key. Having enough room for everyone to have their own private space is important. And having a space where everyone can gather for intergenerational activities and cooking is also key.

Homebuyers are also searching for central areas for family gatherings, plenty of outdoor space, and convenient transportation and medical treatment options.

If you are a homeowner doing a renovation on your existing home, you could be on trend by adding interconnecting doors or expanding your home to include secondary suites for extended family members. You could also add accessible bathrooms and entryways. You could also add a detached ADU or guest house, or finish a basement.

Residential Builders Are Taking Note

Residential builders following this trend have created new designs and floor plans specifically for multigenerational families, with highly targeted marketing. Their plans include additions like large extra bedrooms and junior suites with full baths, additional space with a sitting room, kitchens, laundries, and exterior entrances.

Ashton Woods, Builder Magazine’s 2023 Builder of the Year, lists multigenerational homes as one of their specialties. They designed one of their Phoenix offerings, The Claridge Plan, specifically for multigenerational families, with customizations like an optional kitchenette, additional room space, and a private entrance.

Says Frank Walker, residential builder Lennar’s Colorado Division President, on their company website, “… The innovative Next Gen ® design allows families to share the comfort of their home with loved ones without the need to sacrifice anyone’s privacy or independence.” The homes have separate entrances, an open living area, a kitchenette, a bedroom, and a bathroom. “It’s like having two homes under one roof,” he says. 

Homebuilder D.R. Horton named their multigenerational option “Your Home Suite Home.” Their tagline is, “Two homes under one roof. And so much more.” These models offer a separate living space, a kitchenette, and exterior entrances. “The benefits of multi-generational living can be substantial,” notes their website. “Not only are you provided two homes for the price of one mortgage payment, but also the advantage of shared financial responsibilities including routine maintenance, utility expenses, and other necessary household obligations.”

K. Hovnanian Homes offers their multigenerational models with the tagline, “Once in a Lifetime Designs for Multi-Generational Families.” Says their website, “…We know that nothing is more important than family … and now, with our new line of Extra Suite and Extra Suite+ home designs, we can offer privacy and space to meet your family’s changing needs. Discover the home where you’ll love living together.”

The Future of Multigenerational Living

Experts see multigenerational housing as one helpful answer to the housing crisis. However, there are challenges in bringing families together again through multigenerational living.

Many see multigenerational living as an integral part of healthy family life. In the U.S., however, it is less culturally accepted and may be viewed as a last resort for families, rather than as a positive choice. There may also be a social stigma for young people and seniors who are not living independently.

Despite these issues, experts expect multigenerational living in the U.S. to continue to grow.

AARP (American Association of Retired Persons) supports and promotes multigenerational living. Their 2023-2024 Policy Book states, “When multigenerational living is intentional, it is associated with better health outcomes, decreased loneliness among older adults, and better educational outcomes among children. This type of arrangement is also associated with lower poverty levels and can lead to cost savings on items like rent and childcare.”

AARP suggests both policymakers and the private sector facilitate housing options and grow neighborhoods to encourage and accommodate multiple generations living together. Policymakers can do that through adjusting land-use and zoning laws, and by offering financial incentives to support multigenerational housing.

It says the private sector should create housing options that accommodate multiple generations. It should also explore financing options for multigenerational housing that expand eligibility and include strong consumer protections.

Multigenerational Living: Together Again

Americans living in multigenerational households is an age-old idea that is coming back around. This increase in multigenerational households can have positive implications for both housing and society. The trend can allow more people to purchase a home of their own. It can also help families improve their financial standing by decreasing their overall costs of living. It can improve the social fabric of families and provide deeper connections among generations. Finally, it can give the younger generation a sense of their history while giving older generations more social interaction and care.

The Generations United report recommends doing the following to support the trend:

  • Increase multigenerational housing stock and affordability
  • Promote multigenerational living as an environmentally friendly housing option
  • Expand access to affordable, high-quality child and adult daycare, including co-locating care by developing more intergenerational shared sites
  • Increase access to home- and community-based services and supports

The bottom line is that multigenerational living could be a great option for bringing your family together again. In fact, most people living in multigenerational situations say they plan to continue the arrangement long term.

If more and more families made this choice, the social stigmas around it would be reduced. And as more builders and investors are aware of the potential, there will be more options and opportunities in the marketplace for multigenerational living.

For investors, this trend offers a growth opportunity for remodeling and investing. If you have a property you think would make a great multigenerational living situation, talk with your local realtor about the demand for this type of arrangement in your area. Also, find out how you can market to this specific segment of the market.

Americans living in multigenerational households is an age-old idea that is coming back around.

Then be sure to get in touch with us so that we can help you fund your multigenerational living project!

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