The Sensible Resurgence of the Multigenerational Home
One of the biggest fears spawned by the recession and subsequent up-and-down recovery is getting stuck at home. The commonly expressed concern is that millennials are too burdened with student debts and poor job prospects to make it on their own. According to the narrative of generational dependency, the resurgence in multigenerational living is a trend hardly worth celebrating.
Or is it? Yes, many young college graduates have faced tough economic circumstances in recent years. But the trend toward embracing the multigenerational home began well before the Great Recession, suggesting something else is at work. A record 57 million Americans, or 18.1 percent of the population, lived in a multigenerational household in 2012, according to a Pew Research report, “In Post-Recession Era, Young Adults Drive Continuing Rise in Multi-Generational Living,” released on June 17, 2014. (You can include the First Family among the multigenerational households.) That’s up from 28 million, or 12.1 percent of the population, in 1980. Equally impressive, the return of the multigenerational household marks a striking reversal of the post-World War II decline. In 1940, 24.7 percent of the population resided in a multigenerational home, a living arrangement that bottomed in the early 1980s.
Visit the website of major builders such as Toll Brothers (TOL) and Lennar (LEN) and you’ll see multiple designs of homes targeted at the multigenerational owner. For instance, Lennar’s home comes under its NextGen brand. In comments on June 26 about the Miami-based company’s second-quarter earning, Chief Executive Officer Stuart Miller said that Lennar’s “sales continue to benefit from the execution of our NextGen product strategy. Year-over-year sales of our multigenerational brand grew by 58 percent, totaling 368 sales in our second quarter. We now offer NextGen plans in 201 communities across the country, and in our second quarter, the average sales price for NextGen was 39 percent above the company’s average,” according to a transcript of the earnings call.
The multigenerational home is a safety net, of course. The bigger story is how it reflects the economic benefits of multiple generations living under one roof. For one thing, pooling financial resources among the generations is a smart way to lower the overall cost of home ownership. That’s before taking into account built-in child care (at least for emergencies and date nights) and easy monitoring when aging parents turn frail. Shared ownership allows young adults to build up savings and the older generation to draw down less on retirement savings. Little wonder multigenerational homes are common among immigrant families.
During the last 40 years the median home has increased in size by almost 1,000 square feet, from 1,525 sq. ft. in 1973 to 2,491 sq. ft. in 2013. In 1973, 40 percent of homes had 1.5 bathrooms or less. The comparable figure in 2013 was 5 percent. Better yet, a majority of millennials report that they get along with their parents. The generations even share similar music tastes. The Beatles and Rolling Stones are among the top four favorite bands among those surveyed ages 16 to 29 and 50 to 64, according to Pew.
The embrace of the multigenerational home may get an additional boost from a resurgence in entrepreneurial energy across the country. The American garage may be the legendary birthplace for dynamic businesses, but for many entrepreneurs the home will do. Digital technologies make it practical and relatively cheap to start and run small businesses out of the home.
The younger-adult generation learned from their boomer parents not to plan on a long career at a good-paying job with full benefits. Surveys routinely show that younger workers expect to pursue multiple jobs. The idea of joining the ranks of microentrepreneurs holds enormous appeal, especially to pursue indie capitalist endeavors like part-time web designer, musician, and kickstarter-funded artisan.
A similar entrepreneurial vigor is even more apparent among aging boomers. According to the Kauffman Foundation, Americans ages 55 to 64 start more businesses than any other age group. Last year, businesses begun by that demographic accounted for almost one-quarter of all new businesses, up from 14 percent in 1996. Entrepreneurs who live together can cut expenses and share resources. (Hey Mom, do you have any paper for printing? Son, let’s share wireless costs.)
The rise of mobile, low-cost information technologies has blurred the traditional lines between home and office for a considerable period. The same technologies are fueling the rise of collaborative business enterprises such as Uber, Airbnb, TaskRabbit, co-working office space, and similar efforts. The same insight and dynamics are behind the trend of generations living under the same roof. Imagine, thanks to the potent combination of technology, economics, and social relations, our grandchildren are likely to think the multigenerational home is normal.
Two homes, under one roof!
Contact USModular, Inc. to build your multigenerational home.