From 2021 to 2023, the percentage of multi-generational families buying a home together jumped from 11% to 14%.
So, what is multi-generational home buying and why the increase in the past few years?
Well, the National Association of Realtors (NAR) stated in a recent report that this type of homebuying serves several purposes, including the ability for younger generations to care for their elders, to get a home that may have been financially out of reach or even just to be closer to family and enjoy the time they have together.
With housing prices having jumped during the peak of COVID-19, it's not surprising that younger professionals are teaming up with their parents or even grandparents to make the dream of owning a home a reality.
A Personal Story
Ray Rodriguez, Regional Mortgage Sales Manager for TD Bank in the Metro New York area, says his mother is up in age and in good health.
But life happens and that could change, Ray said.
As someone who would do anything for his family, Ray said when the time comes, he'd welcome his mother into his home with open arms. The same can be said for his kids, as Ray says it's his "duty" and privilege to support his children.
"This kind of homebuying is also good for young adults who may not be ready to have their own place," he said. "For example, if I have a child that just got out of college and is struggling to afford their own housing."
Ray said that the multi-generational home-buying model is an approach found in many cultural communities.
The NAR's findings also support Ray's observations. It found that diverse and minority home buyers (18-19%) are also almost twice as likely as their white counterparts (10%) to purchase a multi-generational home.
Multi-Generational Home Buying Benefits
The NAR conducted a survey to find out the top reasons that multi-generational home buying might be on the rise.
They spoke to both first-time buyers and repeats buyers.
The most popular reasons among first-time buyers were "cost savings" and the desire for a "larger home," both coming in at 28%.
"When you have more people chip in for a monthly mortgage, it helps out quite a bit. In particular with the higher interest rates that we've seen recently, it can help you buy a home that you previously couldn't afford," he added.
The most popular reason for repeat buyers was "taking care of an aging parent" at 23% like Ray mentioned earlier.
Twenty-three percent of first-time buyers also admitted to never leaving home, while 15% said they wanted to spend more time with their parents.
For repeat buyers, 19% stated that children over the age of 18 moved back home.
The biggest combined statistic for both first-timers and repeat home buyers was the desire to be able to afford a bigger home with both groups combining for 46% of respondents using this answer.
Some Interesting Stats
The NAR found that Gen X is the most likely generation to be involved in multi-generational home buying.
The association defines Gen X as those born from 1965 to 1979, so from ages 44 to 58 roughly.
This is interesting as this demographic overlaps two major categories of those looking to buy multi-generational housing – people looking to care for older parents and those whose children might not have left home or came back home recently.
3 Tips for Someone Thinking About Multi-Generational Homebuying
For those who might be interested in investigating this homebuying path, here are some important things to consider:
Understand the Downsides
"Now, it's not all sunshine and rainbows," Ray explained.
There are some downsides.
"I mean, you've got a shared area, right? You've got to figure out how to divide the payment, monthly expenses including utility bills and everything else," Ray added.
There's also going to be a lack of privacy.
"You're in shared areas and you might want to sit on the couch with your shirt off watching a baseball game, but grandma really doesn't want to see that, right?" Ray jokes. "You have more traffic, and you have more cleaning when you have more people in the house."
Have the Hard Conversations Early
Some of the positives in multi-generational homebuying, can also be topics of discussion and even discord.
You may have more people chipping in for a mortgage, but how much is each person chipping in and who gets what room or unit in the property.
There's also shared spaces, so you might want to come up with schedules and times for every member of the family to use common areas.
It's similar to starting a business with family in that money is involved and things can get heated, so it's best to lay everything out early.
Always get professional advice when needed as well, as homebuying of any kind can be incredibly complicated.
Decide on Ownership Rights
Ray says anyone interested in multi-generational home buying should first get some legal advice to agree on how the property will be owned such as joint tenancy, tenants in common or some other form of ownership. Understanding the ownership rights of each family member is important to plan for future changes such as selling the home or in the event that someone passes away.
"I think that you need to have a difficult conversation up front and set everyone up for success," he says.
So, it's important for anybody before you go into this to consult some legal advice to set up these ground rules and much more.
"We hope you found this helpful. This article is based on information available in May 2024 and is subject to change. It is provided as a convenience and for general information purposes only. Our content is not intended to provide legal, tax, investment, or financial advice or to indicate that a particular TD Bank or third-party product or service is available or right for you.
For specific advice about your unique circumstances, consider talking with a qualified professional."