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Families Rediscover Multigenerational Living

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By Steve Cook

Seventy-five years ago, when America was emerging from the Depression and homeownership was less affordable, one out of four Americans lived in homes with grandparents and adult siblings. Today’s housing depression has again forced generations to move in together, but as the housing recovery takes hold, many plan to stay together and revive the multigenerational lifestyle of the past.

In 2011, 17.9 percent of Americans 18 and older lived in someone else’s household, up from 16.0 percent in 2007, prior to the start of the economic recession, the Census Bureau reported today. Some 41.2 million adults in 2011 lived in a household in which they were not the householder, the householder’s spouse or the householder’s cohabiting partner.

The return to multigenerational living has been remarkable and may be more significant than a temporary way to save money. Just prior to World War II, a quarter of Americans lived with extended family, as the U.S. struggled through the Great Depression. In 1980, only 12 percent of the nation’s adults lived in multigenerational households, but by 2011, as millions lost the homes to foreclosures and lending standards tightened, some 17.3 percent of adults. Between and 2011, the number of these additional adults increased by 1.9 million.

In recent years, along with multigenerational households, the phenomenon of “shared households” households that contain an “additional adult” (a resident 18 and older who is neither the householder, the householder’s spouse, nor the householder’s cohabiting partner) has increased as a proportion of all U.S. households. In 2007, prior to the start of the economic recession, 19.8 million or 17.6 percent of households were shared. Nationally, shared households peaked in 2010 at 22.2 million or 19.4 percent of all households and declined to 22.0 million or 19.2 percent of households in 2011. Not surprisingly, household sharing is most prevalent in high-cost areas, like the District of Columbia, California, Florida, Hawaii, New York and Nevada, where 20 percent or more of the population 18 and older lived in someone else’s household in 2011.

Multigenerational households include adult children as well as grandparents. Almost half of all additional adults were children of the householder. Additional adults can also be parents of the householder (9.6 percent), siblings (8.1 percent) and other relatives (16.0 percent). Nonrelatives accounted for the remaining 19.2 percent. The share of additional adults who were children of the householder increased by 1.7 percentage points between 2007 and 2011, while the percentage that was parents or nonrelatives declined, according to the census bureau.

Many of the adults sharing a household with relatives would have been in poverty if they had been living on their own. The official poverty rate for additional adults (based on family income) in 2011 was 15.8 percent. However, their poverty rate would have been 55.5 percent had they lived alone.

Though many families that moved in together in recent years to save money during the housing depression, many are planning to stay together as the economy improves.

“One trend we are seeing is buyers choosing homes based on their capability to accommodate more than one family group,” says broker Becky Russell in Cary, N.C. “Therefore, they also take their extended family’s opinions and needs into consideration when deciding on a property and location.”

Ranelle Birmingham, a managing broker in Leesville, La. said that the multicultural influence of nearby Fort Polk has a lot to do with the multigenerational living in her market, which has not seen many foreclosures. Retiring military families in her market often come from other cultures and expect to live with their extended families. But the trend includes young people as well, including siblings who join together to buy a property that they could not afford on their own.

Builders in Leesville are adapting to the new market with homes that include bedrooms with baths apart from the master suite, separate entrances, and additional space for privacy. Local lenders also are accustomed to multiple incomes and combined credit scores to qualify multifamily buyers, Ms. Birmingham said.

Implications of the multigenerational trend for the real estate industry are significant. Multigenerational living could result in fewer young, single first-time buyers, a group that is generally having a hard time qualifying for financing anyway, and fewer retirement home buyers. However the tradeoff is larger, more expensive properties for larger families in need of more room and generational privacy. Additional incomes from young adults and retirees on Social Security could help families qualify for larger mortgages at today’s low interest rates. Builders and remodelers might find a new market for larger homes designed for the multigenerational market with features to facilitate aging in place.

For more information, visit www.realestateeconomywatch.com.

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