<\/p>\n
Nearly one-in-six homebuyers in 2025 purchased a multigenerational home, which can mean sharing costs and space with adult children and\/or aging parents. In an era when only 21% of homes are purchased by first-time buyers, an all-time low according to statistics from the National Association of Realtors, this may be the only path to homeownership for many in Gen Z and millennials.<\/p>\n
More than two-thirds of homebuyers in multigenerational households cite costs as the primary reason to cohabitate with family.<\/p>\n
\u201cUtility bill fluctuations, unexpected home repairs or maintenance issues, and rising home insurance premiums all impact financial stability,\u201d said Courtney Klosterman, home insights expert at\u00a0Hippo (www.hippo.com). \u201cWhen those costs are shared, the whole household feels more stable.\u201d<\/p>\n
Read:More helpful personal finance stories<\/p>\n
Discover:Five ways to tap into your home equity<\/p>\n
Multiple salaries help make homeownership affordable<\/p>\n
Affordability is a key driver in buying a home with older or younger family members, especially in areas with exorbitantly high housing costs or lower-than-average wages. Klosterman said that California, Arizona, New Mexico and Texas lead the way in multigenerational homes.<\/p>\n
\u201cMultigenerational households report similar average incomes to other homebuyers,\u201d she explained.<\/p>\n
In other words, it takes the same annual income to afford a home \u2013 typically one-third of the home\u2019s selling price \u2013 whether that money comes from one, two, or even more salaries.<\/p>\n
\u201cIn some states where multigenerational homes are common, like California and Arizona, it takes at least three people,\u201d Klosterman said. \u201cIndividuals who might face financial constraints on their own are pooling resources to achieve what could otherwise be out of reach. Having multiple family members contribute to housing costs can make the difference between renting and owning.\u201d<\/p>\n
Other advantages to buying a multigenerational home<\/p>\n
In many cases, parents buy a home with their adult children to make housing more affordable. But there are other advantages and other reasons parents and adult children join forces to buy a home.<\/p>\n
Transferring generational wealth cleanly<\/p>\n
Parents often contribute to the down payment or even mortgage costs to give their adult children the income boost they need, said Nikki Beauchamp, NYRS, associate broker at Sotheby\u2019s International Realty.<\/p>\n
But in families with high net worth, she said, there\u2019s another reason. \u201cRather than wait until there is a death for someone to inherit funds to put toward a house, it\u2019s being done in life.\u201d<\/p>\n
\u201cIndividuals who might face financial constraints on their own are pooling resources to achieve what could otherwise be out of reach. Having multiple family members contribute to housing costs can make the difference between renting and owning.\u201d<\/p>\n
Making caregiving more convenient<\/p>\n
While money is often a driver, there are additional advantages for the older and younger generations. Grandparents in their 50s, 60s, and 70s can help take care of grandchildren. When the time comes that the parents age and need help, cohabitating can make it easier on adult children who become caregivers, making it easier for older adults to stay in their homes longer.<\/p>\n
\u201cAs elder care becomes a growing reality for more families, multigenerational households offer a built-in solution: older adults can receive support from family members, reducing the need for hired care or assisted living, while grandparents and other relatives can contribute to childcare,\u201d Klosterman said.<\/p>\n
Maintaining cultural norms and building new traditions<\/p>\n
Multigenerational households were common in past centuries. Today, finances may force some families together, but traditions are equally important.<\/p>\n
\u201cFor many families, living together across generations isn\u2019t a financial decision, it\u2019s a reflection of values,\u201d Klosterman said. \u201cLiving together is seen as both a family responsibility and source of connection.\u201d<\/p>\n
Considerations before signing off on a shared space<\/p>\n
Buying a home with your adult children isn\u2019t like taking a multigenerational vacation, although the challenges of shared space and shared expenses come up in both situations. More than one-quarter (26.4%) of people in multigenerational homes reported privacy concerns, according to a report from Rocket Mortgage. according to a Rocket Mortgage report. <\/p>\n
Other problems can arise from splitting costs. Fortunately, both have solutions \u2013 and communication is key.<\/p>\n
Related: Can caring for aging parents help my tax bill?<\/p>\n
Discuss shared space and privacy needs<\/p>\n
Choosing a home that can fit everyone comfortably, with private places for family members who may work from home or need a space to get away from a busy household, can make it easier. \u00a0Talking it out beforehand to address problems before they arise can also help.<\/p>\n
\u201cWhen families communicate expectations from the very beginning, it vastly improves their functionality. Problems such as privacy, common areas, houseguests, noise, and splitting costs cause tension much more than the mortgage,\u201d said Ryan Fitzgerald, owner\/broker at Raleigh Realty.<\/p>\n
Choose the right type of home<\/p>\n
Finding the right type and size home can make a difference in costs and comfort, Fitzgerald and Beauchamp agreed.<\/p>\n
Some families may opt for a mother-daughter property, which allows dual-family use and gives everyone their own private entrance, kitchen, bathroom, and the privacy that comes with these things. But make sure the house fits the legal definition.<\/p>\n
\u201cIf adequate approvals, such as a separate entrance, kitchen, and utilities, are not in place, problems can occur when selling, appraising, or financing,\u201d Fitzgerald said.<\/p>\n
In New York City where Beauchamp works, she noted, cooperatives (co-ops) may have strict restrictions to house multiple families, while a condominium, single-family home, or a multi-family home won\u2019t raise any eyebrows about occupancy. Options in nearby suburbs may not have these restrictions, she noted, emphasizing that it\u2019s important to understand local zoning laws.<\/p>\n
Understand legal considerations<\/p>\n
Buying a house is a long-term decision that\u2019s much harder to undo than a two-week vacation. It makes sense to bring in professionals to ensure a smooth transaction.<\/p>\n
\u201cBuying with adult children works best when the framework is determined up front. That most often requires deciding on how the title will be held, naming responsible parties for payments, and matching ownership percentages to contributions to financing,\u201d Fitzgerald said.<\/p>\n
Outline the exit strategy<\/p>\n
What happens if financial circumstances change and one family or another can no longer afford the monthly mortgage payments? What happens if one of the owners dies? What if the arrangement just isn\u2019t working out?<\/p>\n
These are all important considerations, especially if there are other siblings involved who may believe the home equity should be part of their inheritance.<\/p>\n
\u201cIt is vitally important for the buyers to talk with their lawyers and tax professionals, particularly in circumstances where there are multiple siblings involved. Cleanly considering what happens should either party pass away is important,\u201d Beauchamp said.<\/p>\n
\u201cBy drafting a written agreement that outlines exit strategies \u2014 sale, buyout, or refinancing \u2014 there is far less potential for future conflict,\u201d Fitzgerald concluded.<\/p>\n
#Buying #house #aging #parents #rise<\/p>\n","protected":false},"excerpt":{"rendered":"
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