A Guide to Managing a Multigenerational Home

A multigenerational household is a home where more than two adult generations live together. Multigenerational homes have been steadily rising in the United States, with more than 1 in 4 Americans currently living in a household with three or more generations.

A recent Generations United's study also found that 57% of Americans living in a multigenerational household started or continued to live in their households because of the pandemic. Financial planning can help families set boundaries, reduce emotional strain and live together successfully.

Multigenerational family living has grown across all U.S. racial groups, most age groups and men and women. During the Great Recession in 2008, family members chose to live together to cut costs. But the trend has not reversed. In recent years, many Americans have continued to prefer to live in multigenerational homes for a variety of reasons.

Some middle-class Americans have found it difficult to manage without the collective efforts of family members. Wage stagnation and increased life expectancy have played a role, as has growing racial and ethnic diversity in the U.S. population. In addition to other factors, the cost of healthcare, elderly care, childcare and other issues helps explain the rise in multigenerational living.

• Need for elderly care: Having your parents live with you can significantly reduce costs of expensive nursing homes or other assisted living facilities. The monthly median cost of a private room in a nursing home is $8,821, while the monthly median cost of assisted care living is $4,300, according to a Genworth’s Cost of Care Survey. By opting for multigenerational homes, families also spend more time together and have the opportunity to offer more loving home health care.
• Assistance with childcare: According to Urbansitter, families spend an average of $16.75 per hour to pay for a babysitter for a single child. The cost rises to $19.26 per hour for two children. A multigenerational home helps families reduce babysitting or childcare costs, not least because older grandparents sometimes offer care free of charge.
• Unemployment among younger generations: Generation Zers and Millennials were greatly affected by unemployment or lost income due to the COVID-19 pandemic. The U.S. Bureau of Labor Statistics reported that youth between 16 and 24 faced unemployment rates of 18.5 percent in July 2020, an increase of 9.4 percentage points from the same month a year prior. Periods of financial crisis tend to push younger adults home.
• Cultural and familial ties: According to a recent study by the Pew Research Center, Asian and Hispanic populations are growing more rapidly than the white population. Minority populations are more likely than whites to live in multigenerational family households due to strong cultural and familial ties.

When bringing multiple generations together, you should choose a home with the capacity to handle a broad range of lifestyle demands. Multigenerational homes may need to include separate entrances and multiple bedrooms to meet the diversified needs of family members. Common space, fully furnished basement suites and a bigger-sized kitchen are also common characteristics of a multigenerational home.

There are various lifestyle basics to consider before finding a multigenerational home. Having a realistic discussion can help your family set boundaries and expectations at the outset. If you’ve addressed key topics in a frank and thoughtful conversation, you’ll also know what to look for when it comes to house hunting.

Having a good multigenerational property can improve the prospects of success when living with loved ones. A multigenerational home should fit the specific needs of most family members regardless of age or health. Speaking to a real-estate agent can help you gain clarity and locate a fit. The following factors should serve as a baseline.

Figuring out how to pay for a multigenerational home is a key step toward making a long term and sustainable financial plan. One of the best ways to secure funding is to finance a home with a mortgage, which is a loan taken to purchase a property or real estate asset. A mortgage allows a lender to take a property back in the case of default, and it can provide buyers with greater flexibility.

Financial planning can help a multigenerational home be successful. At its core, strong planning revolves around having each household member contribute to either generating income or minimizing expenses. Maintaining open communication and making your expectations clear at the outset can also help you avoid misunderstandings later on.

Families who live in multigenerational homes tend to have strong emotional bonds. To sustain a positive living environment, aim to strike a balance between spending quality time with a loved one and respecting someone’s privacy. Being able to cooperate is one of the most important factors in helping a family live in harmony. The following practices can help multigenerational households:

When more than one generation lives in the same house, the financial demands of each group must be considered. Various resources and groups provide useful information which can help.

• National Association of Realtors: The association produces a trends report which provides useful information on the characteristics of home buyers, steps involved in the home buying process and financing a home purchase.
• Genworth: Genworth can help you and your family calculate the cost of care across all cities in the United States. You can also compare the cost of care between two geographical locations, which can help when you plan to buy a home or rent a flat.
• USA.gov: This website can give you invaluable information on buying a home and include details on the government programs that can help you pay for a purchase. Their guide covers FHA home loans for first-time homebuyers, homeownership vouchers, programs by state governments and programs for rural residents.
• FRED Economic Data: FRED gives the historical 30-year fixed-rate mortgage average in the United States, which is important to monitor when contemplating a home purchase. Data is updated weekly ending Thursday.