by Chad Jordan 
Multigenerational Home Buying: Why More Families Are Embracing Shared Living
For many years, multigenerational living was considered a last resort for families facing financial hardship or caring for aging relatives. However, that perception is changing. Increasingly, families are choosing multigenerational home buying as a lifestyle decision rather than a necessity.
According to research from the National Association of Realtors (NAR), the percentage of multigenerational home buyers reached 14% in 2022, a figure close to an all-time high. Families are now opting for this living arrangement for various reasons, including reducing living expenses, pooling resources, providing care for young children or elderly family members, and enjoying more quality time together. As Deputy Chief Economist Jessica Lautz notes, “Multigenerational home buying is a way for families to care for one another, support each other, and purchase a home that may have previously been out of reach.“
The trend toward multigenerational living is especially prevalent in recent years, as rising housing costs make homeownership more challenging for younger generations, and older adults seek options for aging in place. According to Pew Research, the number of Americans living in multigenerational homes has quadrupled since the 1970s.
The benefits of multigenerational home buying are significant. Studies show that people who live in multigenerational homes often enjoy better health, longer life expectancy, and greater financial security. Pew Research also found that the majority of individuals who live with extended family members report that the experience has been positive.
However, multigenerational living isn’t without its challenges. It can be stressful, especially if the home isn’t designed to accommodate multiple generations. To ensure comfort and privacy, it’s essential to choose a home with a layout that suits the needs of both younger and older family members.
If you’re considering multigenerational home buying, it’s crucial to select a property that offers ample space, separate living areas, and accessibility features for all family members. In this guide, we’ll explore the key factors to consider when purchasing a home for multigenerational living and provide tips for making the most of this growing trend.
WHAT TO CONSIDER BEFORE SHOPPING FOR A MULTIGENERATIONAL HOME
Multigenerational Home Buying: Key Considerations Before Starting Your House Hunt
Before diving into the multigenerational home buying process, it’s crucial to have open discussions with your family to align on what you all want from the new home. Have you agreed on your priorities? Are there potential compromises? Are there any concerns that need addressing?
Taking the time to understand the “why” behind your decision to buy a multigenerational home can help guide the process. The goal of multigenerational living is to provide care for aging relatives or share responsibilities, for some families. For others, it’s about pooling resources to secure a larger, more desirable home or to reduce expenses like childcare or senior living costs.
For example, homeowner Jian Huang bought a multigenerational home to care for her aging mother, but the decision also saved her family between $25,000 to $40,000 annually. Huang told Apartment Therapy, “It makes so much sense financially and emotionally that we would not have it any other way.”
While considering short-term needs, it’s equally important to think about potential long-term challenges. For instance, accessibility may become an issue if some family members are nearing retirement. Features like steep stairs or narrow hallways could be problematic as time goes on. Additionally, if you’re considering a luxurious home with amenities like a pool, it might fit your immediate budget but could lead to higher long-term maintenance costs.
If you haven’t had these conversations yet, set a date to discuss them as a family. We can assist by interviewing family members individually to help you understand what’s feasible in today’s housing market.
What to Look for in a Multigenerational Home
WHAT TO CONSIDER BEFORE SHOPPING FOR A MULTIGENERATIONAL HOME
Once you’ve clarified your family’s needs, the next step in multigenerational home buying is creating a budget to understand what you can afford. Consider both the upfront cost of the home and ongoing maintenance expenses to avoid overextending your finances.
When buying a multigenerational home, the size and layout are essential. Homes offering ample space for privacy are particularly suitable, especially if young children are involved. The layout should also account for the needs of various family members, ensuring comfort for everyone.
Here are a few multigenerational home buying options to consider:
- Large homes with numerous rooms and at least one or more ensuite bathrooms for added privacy.
- Homes with accessory dwelling units (ADUs), such as a basement apartment, provide additional living space.
- Multifamily units, like duplexes, offer separate living spaces under one roof.
For families looking to age in place, a home with a separate ground-floor unit, such as a backyard ADU, is a highly practical choice. Sheri Koones, an expert on multigenerational living, notes that such homes can help seniors avoid expensive assisted living facilities, providing them with the independence of a home they can live in for many years.
Another option is buying a home you can modify to create multiple units, either by adding new construction or renovating existing spaces. However, these renovations can be expensive, so it’s important to carefully evaluate whether the investment is worthwhile. When visiting potential properties, we can help you assess the costs and connect you with trusted contractors specializing in multigenerational home buying renovations..
How to Buy a Multigenerational Home: A Step-by-Step Guide
Multigenerational home buying can be complex, especially when multiple family members are applying for a mortgage together. However, depending on your financial situation, you may find that qualifying for a mortgage as a group can sometimes be easier than applying individually.
To start, consult with a mortgage lender or broker to get advice tailored to your unique situation. We can connect you with professionals who specialize in multigenerational home buying and understand the intricacies of co-buying.
While there is technically no limit to the number of co-borrowers you can have, some lenders may be more lenient than others. For example, conventional lenders typically work with a maximum of four borrowers per loan. If you’re planning to buy a home with more than four co-borrowers, you may need to explore alternative lending options.
Your credit scores will play a significant role in determining the mortgage terms, so it’s essential for each family member to check their credit reports early in the process. Reviewing your credit reports will help identify any errors or areas of concern, such as high credit card debt, which could be corrected before applying for a loan.
As you plan your multigenerational home buying strategy and budget, there are key questions to discuss with your family:
- Who will be on the mortgage?
- Should all family members be included on the title?
- Would having everyone on the mortgage improve the mortgage rate?
- For those with lower credit scores or who don’t qualify for the mortgage, can alternative arrangements be made to ensure they still contribute financially?
Additionally, it’s important to consider the tax and estate planning implications of multigenerational home buying. What happens if some family members decide to leave the arrangement in the future? To navigate these potential issues, it’s a good idea to consult with a legal professional or accountant.
Bottom Line
Multigenerational home buying has grown in popularity for a reason: it’s an excellent way to combine resources and create a supportive home for more than just your immediate family. It also offers numerous benefits, such as reducing loneliness and promoting health and well-being.
If you’re considering multigenerational home buying and want to know if it’s right for you, contact us for a consultation. We’d be happy to guide you through the options and help you envision the perfect home for your family’s needs.house.
The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.
Sources:
- National Association of Realtors –
https://www.nar.realtor/blogs/economists-outlook/all-in-the-family-multi-generational-home-buying - Pew Research Center –
https://www.pewresearch.org/social-trends/2022/03/24/financial-issues-top-the-list-of-reasons-u-s-adults-live-in-multigenerational-homes/ - SSM – Population Health –
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5769098/ - Better Homes and Gardens –
https://www.bhg.com/what-to-look-for-in-a-multigenerational-home-8409277 - Apartment Therapy –
https://www.apartmenttherapy.com/multigenerational-homes-37412085 - Realtor Magazine –
https://www.nar.realtor/magazine/real-estate-news/home-and-design/all-under-one-roof-trends-in-multigenerational-living - Bankrate –
https://www.bankrate.com/mortgages/how-many-names-can-be-on-a-mortgage/ - Experian –
https://www.experian.com/blogs/ask-experian/what-credit-score-do-i-need-to-buy-a-house/ - Kiplinger –
https://www.kiplinger.com/retirement/estate-planning-for-multigenerational-living-arrangements
Institute for Family Studies –
https://ifstudies.org/blog/multigenerational-living-is-it-a-solution-for-our-aging-population
