The trend in multigenerational housing is continuing and increasing, according to studies done by the Pew Research Center, In fact, there are now a record number of 64M people living in multigenerational households.
The reasons for this rise in multigenerational living (two or more adult generations living together or those households with grandparents and grand children living together) are both economic and cultural. With more than 50% of retired people having saved less than $10,000 (Wallet Hub), steadily rising home prices and steadily rising long-term care costs, multigenerational living is the only doable option. Lawrence Yun, chief economist with the National Association of REALTORS® (NAR), said that the primary reason for this uptick in multigenerational living “…is because house prices are so expensive that the only way to make it work is to double up or triple up.”
Add increasing numbers of immigrant populations who view shared living as common to the above economic reasons and you have increasing numbers of multigenerational households.
John Burns, a California real estate investment consultant, anticipates this trend of multigenerational households increasing particularly among people born in the 1970’s. Burns calls this group “the foreclosure generation.” “People in this group had the highest homeownership rate ever at their 10th reunion and then the lowest home ownership rate at their 20th reunion…as their parents age into their 70’s and 80’s and need help to manage themselves independently, you’ll see these two groups (Millennials and Boomers) pair up in all sorts of ways.”
This trend of multigenerational households is most prevalent on the West Coast. According to NAR’s chief economist Lawrence Yun, “There is a larger percentage of Asian and Hispanic families in this region of the country and they are more amenable to multigenerational living.”
You as the real estate agent can help prepare your multigenerational clients before you take this specialty business out on the street and/or out on your website. Encourage these clients to make lists of must have’s in a house. Things to be included could be a large backyard, a shaded porch, a driveway to park cars, etc.
Encourage your multigenerational clients to purge now in anticipation of sharing a home with related adults. No one household needs two or three lawnmowers, two or three sets of gardening tools, or two or three sets of anything.
Here is a list of to dos and must haves combined:
- Create a “house prenup” document that spells out who pays for the home and when. The grandparents might make the down payment with money they made selling their family home. The parents might pay for monthly insurance costs, HOA fees and/or utility costs. Also spell out how they together pay for daily/weekly/monthly living expenses.
- Create an “exit strategy” document in the event someone decides to move out.
- Have ALL adult parties sign both the house prenup document and the exit strategy document.
- Welcome help from the parents’ and grandparents’ network of friends. Assign specific jobs to each person such as packing up the kitchen so that everyone is included in making this process work. It’s also a nice way to bring old friends into a new life.
- Begin looking at in-law suites or auxiliary living units that are separate from the main house but on the same lot. The main house might be beautiful but if the in-law suite is unacceptable to the grandparents, move on to the next house.
- Make sure to check with regulations that specify occupancy capacity for the property, building code regulations and parking, curb and driveway access.
- Everyone needs to know that renovations may include adding extensions, bathrooms and kitchens as well as adding extra sound batting to help reduce noise between two floors.
- Create 2-year, 5-year and 10-year plans that spell out things such as the parent generation wanting to have another child or a grand parent needing a designated “quiet” room
- Create and sustain open communications.
- BEFORE SIGNING ANYTHING, make sure all the generations have had their respective lawyers figure out zoning/insurance and tax requirements and responsibilities. It’s always easier, faster and less expensive to solve potential misunderstandings or questions before there is a problem, rather than after the problem explodes.