New Market in Multigenerational Housing

A record 57 million Americans – 18.1% of the U.S. population – lived in multigenerational households in 2012, twice the number of people who lived in such arrangements in 1980, according to a 2014 report from the Pew Research Center. Since 1970 the number of people living in multigenerational households has steadily increased. The largest spike, not surprisingly, coincided with the Great Recession of 2007–2009. Since then the uptrend has continued, albeit at a slower pace, according to 2014 Pew Research Center analysis of U.S. Census Bureau data.

The steady climb can be attributed to a number of factors: Many Millennials can’t afford to move out on their own or are getting married later; Boomers want to keep close watch over their parents or can’t afford elder housing for them; and grandparents want to help with the grandkids – offsetting childcare costs and enabling quality time among the generations. There’s also been an increase in American immigrant families, many of whom hail from cultures where multigenerational housing is the norm and who want to continue the tradition while living in the U.S.

Here we take a look at the new market in multigenerational housing and what it means for the future of home-building.

Together, but Apart

Living in one home doesn't necessarily mean that the generations want to spend every minute together. One of the key features of comfortable multigenerational housing is that it offers privacy and space for everyone: children, adult children, parents, grandparents, adult siblings and so on. The problem is finding it.

Much of the real estate market is filled with suburban, single-family homes that don’t meet multigenerational housing needs, so, traditionally, the way people have made space for extended family members is through a carefully planned remodel – adding a downstairs bedroom and bath, for example, or converting the basement into an apartment.

But that's not the only choice. This new living style is giving birth to a new category of housing – homes that are built from the start with multigenerational living in mind. Purpose-built multigenerational homes are designed with multiple master bedrooms with en suite baths – and at least one main-floor bedroom suite that includes a separate living area, entrance, eat-in kitchenette and laundry room – ensuring space and privacy for all. These new structures allow an extended family to live together while still being able to “go home” at the end of the day.

Builders across the country have picked up on the growing demand. Miami-based home builder Lennar, for example, pushed into the multigenerational space in 2012 with its “NextGen” brand, and Pardee Homes, a division of California-based TRI Pointe, launched the “GenSmart Suite” brand to address the market.

How Families Benefit

Americans have a lot to learn from cultures where multigenerational living is the norm. Banding together can make a great deal of sense for a variety of families. Some examples:

  • Reduced Costs Having everyone under one roof can end up being substantially cheaper than living apart with more than double the rent/mortgage payments or assisted-living-facility costs.
  • Shared Expenses Family members can share the monthly expenses, everything from the mortgage and taxes to utilities and groceries.
  • Shared Home Care With just one house to take care of – and one yard – home care can be less time consuming and more affordable.
  • Shared Childcare Children get quality time with their grandparents, while parents achieve decreased childcare costs.
  • Resale Appeal Homes that accommodate multiple generations are what people are looking for now and what they’ll continue to look for in the future, according to demographic trends. Thirteen percent of all home purchases in 2014 were by a multigenerational household, according to the 2015 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends Report.

Zoning

Zoning regulations are perhaps the single largest barrier to the development of multigenerational housing in the U.S. Some municipalities, for example, classify a home as a duplex if there’s a kitchenette with full-sized appliances. To work around this, builders such as Lennar design their kitchenettes with a sink, a small refrigerator and a convection oven but no range or oven. The homes run on a single electric meter and from the street look like any other house on the block.

An area’s zoning may also determine the density allowed for a neighborhood or site, which could preclude multigenerational housing. If the demand for multigenerational housing continues to increase – as it has for the past five decades – zoning laws will have to adapt in order to encourage more builders to enter this space, giving homebuyers more options. Read New Retirement Living Option – And Income Source for another take on multigenerational living.

The Bottom Line

Socioeconomic factors and cultural preferences have increased the demand for multigenerational housing. While it might not be the right choice for everyone, the benefits are many, including tighter family bonds, peace of mind knowing that parents are well cared for and being able to share costs, home care and childcare. If demand continues to increase (as it’s expected to), there may be a shift in home design, zoning regulations and what constitutes a “traditional” home.