Aging parents and young adults are moving in and prompting home searches for larger homes to accommodate more family members under one roof.
The number of home shoppers buying a multigenerational home since the pandemic has risen to a nine-year high of 15%, according to data from the National Association of REALTORS® dating back to 2012. That means home shoppers are looking for larger homes that can accommodate more family members living under one roof.
The top reason to buy a multigenerational home is for aging parents to move in and for younger family members to take care of that aging parent or to spend more time with them.
“While the concern of COVID-19, loneliness, or child care needs may have driven the change, the new paradigm may be here to stay,” writes Jessica Lautz, NAR’s vice president of demographics and behavioral insights at the association’s Economists’ Outlook blog.
Another reason driving the increase: cost savings. “Family members are pooling incomes to purchase a larger home,” Lautz notes. “This reason has accelerated in the last two years as people are relying on others due to the loss of income or potential loss of income, and marriage rates have continued to drop. This factor has likely seen an increase during the pandemic as many Americans face a cut in wages and lost income.”
Adult children are moving back home, also driving an increase in multigenerational homes. More young adults are living at home with their families than since the Great Depression. Fifty-two percent of adults aged 18 to 29 are living at home, according to an analysis from Pew Research Center of U.S. Census Bureau data. Many of these young adults are college students who have moved home in the pandemic, may have faced job losses, or were tired of living independently and paying rent.
For these young adults who are still employed, they may be able to save up by moving back home. “In the pandemic, student debt on federal loans went to 0% interest rate and payments went automatically into forbearance,” Lautz notes. “If a young adult is employed, they could really tackle student debt and pay it down. This would help first-time buyers move out of their parents’ house and into homeownership. Student debt is one of the biggest hurdles for first-time buyers.”
Many first-time buyers purchase a home directly after living in a family member’s home. Lautz says this share likely will increase next year with more than half of young adults living at home. “This allows first-time buyers to continue saving for a down payment and closing costs as they find the perfect home,” she notes.
Source: “The Rise of Multi-Generational Homes During COVID-19,” National Association of REALTORS® Economists’ Outlook blog (Feb. 23, 2021)