Living arrangements in America today are a far cry from the “Ozzie and Harriett” nuclear families of the 1950s and 60s. Eighty-four million Americans, 20% of the nation, now live in multigenerational households that include two or more adult generations or grandparents and grandchildren younger than 25.
Multigenerational households are an excellent way for families or individuals to save money. Some Hispanic and Asian societies have traditionally featured homes with two or three generations. Among families with Asian heritage, 29% lived in multigenerational family households in 2016, according to census data. Among Hispanics and African Americans, the shares in 2016 were 27% and 26%, respectively. Among whites, 16% lived with multiple generations of family members.
In recent years, large numbers of young millennials living with their parents on a temporary or semi−permanent basis have accelerated the growth of multigenerational households. One third of 25- to 29-year-olds in 2016 lived with their parents.
Multigenerational households have advantages and disadvantages. Here are some of the most important pros and cons.
Advantages of Multigenerational Living
Saving money. Households with two or more adult generations are economical in many ways. When shared by more adults, mortgage payments or rent are lower per person than if they live apart. Other household expenses can also be shared, including utilities, food, maintenance costs, decorating costs, property taxes, homeowners’ insurance, and homeowners’ association fees. Sharing expenses gives young adults the opportunity to build savings or pay down debt. Living with their families temporarily gives young adults time to reduce debt, improve their credit and save for a down payment.
Easier home financing. Having more adults with financial assets and incomes will increase the chances of having a purchase mortgage or refinancing approved. You may also be able to borrow more. However, lenders will use the lowest credit score when underwriting the mortgage. Before applying, be sure everyone’s credit is in good shape.
Help with minding children. Having additional adults at home, particularly grandparents, helps parents with minding young children. Grandparents help grandchildren survive their parents’ divorce by giving grandchildren undivided attention and helping when single parents are overwhelmed.
Stronger family bonds. When three generations live together, family bonds are strengthened. When grandparents are involved in their lives, children have fewer behavioral and emotional problems. Grandparents can be critically important in the lives of children with divorced parents. Living with their children and grandchildren relieves grandparent’s loneliness and enriches their daily lives.
Sharing in home equity. The longer you make mortgage payments, the more equity you gain. Equity is the difference between your home’s value and what you owe the lender. You can access your equity by refinancing or selling. All the household members who make mortgage payments should have a written agreement with the borrower who is listed on the title and mortgage to share in a prorated amount of the equity at the time the house is sold or refinanced.
Longevity. A recent NIH survival analysis found that healthy members of multigenerational families have lower premature mortality rates and were likely to live longer. One reason for this might be because, in a multigenerational household, there are more adults to provide emotional support for each other. Family support encourages feelings of wellness and stability for each person.
Shared household chores. Splitting up household chores among adults and older children can result In less burden and stress. For example, grandparents can pick up children from school and babysit when the parents are out. Parents can use their computer skills to pay bills and keep the family budget. Children can be responsible for cleaning their and helping with outdoor tasks like mowing the lawn, raking leaves, and shoveling snow.
Participating in the home interest deduction. If you are listed on the title as a co-owner on the title and on the mortgage as a co-signer, and you and at least one other person paid interest on a mortgage that was for the home, you can deduct the amount of interest you paid. See IRS Publication 936 (2018), Home Mortgage Interest Deduction for more information.
Improved security. Grandparents feel more secure living with family, and their presence ensures that there will be someone at home during the day when many burglaries occur.
Disadvantages of Multigenerational Living
Less privacy. With more people living together, each will have less personal space than if they lived separately. Living with others may be more difficult for grandparents and young adults who are accustomed to living alone. The transition can be eased by allocating private space for each person where they can retreat when they need to and simple rules, like knocking on bedroom doors before entering.
More noise. Adults who are unaccustomed to being around children may need some adjustment time. Household rules can limit loud play by place and time.
More housework. More people means more dishes to wash, floors to clean more frequently and larger laundry loads. House rules may include putting toys away, cleaning up after cooking, which means more household cleaning and maintenance. Household chores might be rotated for jobs like bathrooms, kitchens, and heavily used family spaces.
Family tensions. Relationships among friends and family can fester when living together. Potential animosities should be considered and addressed before forming the household. Disagreements are bound to occur between friends and family members in a multigenerational household. Common issues that can cause tensions include financial conflicts, parenting differences, and household responsibilities. Rules and procedures for addressing problems like these should be discussed and agreed to before they become problems.
Upgrades and remodeling. Even a new house will require attention after a few years. A new baby or new resident might require renovation or adding new space. Costs should be shared equitably and work scheduled when it will be less of a burden on all.
Retrofitting for seniors. If parents of a disabled child or aging grandparents have not planned for the costs of retrofitting a home for walk-in tubs, stair lifts, and other needs, the household should create a plan for retrofitting that includes financing the cost and scheduling work.
For seniors contemplating their retirement options, the opportunity to join their family in a multigenerational household can be a welcome option. They can save money, live more comfortably and enjoy their children and grandchildren as they age. Young adults might find rejoining their family to be a temporary solution that allows them to save money as hey get started in their careers. Multigenerational living may be the first choice for adult singles, younger parents, and grandparents, especially those with an ethnic tradition of two, three, or even four generations living together.
The economics of modern real estate markets make multigenerational households an attractive option for families who have not considered them. In today’s markets, families that can afford a larger home will find more properties for sale in higher price tiers, yet each adult will spend less on housing than if they live apart. As population centers become crowded and new construction continues to fall short of demand, multigenerational living will become even more economical in the future.