Lew Sichelman
Multigenerational living is a common practice in many countries, including here in America.
Prior to World War II, many extended families, particularly those of recent immigrants, lived together under one roof. After the war, though, a shift toward independent living took hold, spurred in large part by the rise of relatively inexpensive housing in the suburbs.
But the practice never went away entirely. And over the last few years, it has gained steam because of a number of factors – the pandemic and high housing costs among them. According to the Pew Research Center, “the number of Americans living with multiple generations under one roof has quadrupled” to some 59 million over the last 50 years.
For the most part, multigenerational living involves adult children, plus one or both parents and/or grandparents. Sometimes it’s a young adult returning to the nest after college or after a divorce. Sometimes it’s siblings choosing to live together, maybe to care for each other’s children or to pool resources while each saves for their own places.
Homebuilders Wake Up to Trend
Whatever the arrangement, some builders have taken notice. Miller and Smith, a homebuilder active in Maryland and Virginia, has seen “an increase in interest from multigenerational households,” Senior Marketing Manager Erica Bell told me. “It began during COVID and has continued.”
After its success with a multi-gen home plan in a Maryland project, the company is now offering a new version featuring two primary suites: one upstairs and the other on the main floor, with a full bathroom and sitting area. The plan includes a finished basement recreation room, also with a full bath, so everyone can have a dedicated space to relax and steal away for some needed privacy.
The National Association of Home Builders reports a steady increase in the share of houses built with two or more main suites – and not just in sprawling single-family houses like Miller and Smith’s, which range from 3,900 to 5,000 square feet. Chicago-based Lexington Homes offers multi-gen living in some of its townhouses.
Besides the dual primary suites on the upstairs level, the company offers an option to add a bedroom and bath on the lower level, which can be useful for in-laws or grown children. In one instance, a father and son purchased a unit together. In another, parents bought one unit and their newly married daughter bought the unit next door.
According to the latest, yet-to-be-published NAHB survey, 45 percent of all buyers would prefer to buy a multigeneration home. But there are differences among ethnicities: Just 37 percent of white respondents said they would want such a place, compared with 72 percent of Latinos, 71 percent of Asian Americans and 61 percent of African Americans.
In the resale sector, 14 percent of all buyers are multigenerational, according to the latest figures from the National Association of Realtors. Whether it’s young roommates or senior citizens, “people are supporting each other,” said NAR Deputy Chief Economist Jessica Lautz.
How Buyers Can Do It
If you already own a place, you really don’t have to worry about financing if you want to bring a parent or an adult child in under your roof. But if you are buying a place together, there are rules.
For one thing, lenders want to know who’s going to be living in the house, Stephen Trye of the Paramount Residential Mortgage Group in Baltimore tells me. If you cannot show that the house is the additional family member’s principal residence, for example, it could be considered an investment property – the financing for which comes with higher interest rates and other restrictions.
To secure the best deal, you need to show that the relative cannot afford to buy a house on their own. You can use whatever income the person has to help qualify for the loan, but if you do that, you also have to include their debts in the all-important debt-to-income ratio.
Only one person need be on the mortgage, as long as that person actually occupies the house. And if your relative is unable to work or does not qualify for a mortgage on their own, you are considered the owner/occupant for financing purposes.
Two Big Warnings
Finally, a warning: Merging different generations into one household doesn’t always work out. “It’s not always a good idea,” said agent Francie Stavish, a certified senior adviser in Illinois.
“It’s not like it used to be when [multigenerational living] was the norm,” Stavish told me. “Seniors are not as big on sharing as they once were, and some don’t like to share information about their financial and medical situations. That’s important information their adult children sometimes need to know.”
She said that aging parents sometimes feel like they’re being treated like children. And a survey by Rocket Mortgage found that differences of opinion can lead to friction.
Privacy is a big concern, too – the No. 1 issue in multi-gen households, Rocket’s survey found. Stavish says seniors often feel they aren’t given the privacy and respect they deserve. That’s why she recommends that each family have their own doors to the outside.
She also suggests that families work with a neutral third party with whom each person can share their concerns – thus settling disagreements without angering anyone.
Merging families can be tough for anyone. So, keep the lines of communication open, establish clear boundaries and rules, respect each other, and be patient.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
