Is the three generational household leaving 21st Century America and returning to life on Walton’s Mountain?
For several years housing experts have watched with concern as American families adopted a very old way of living that includes grandparents, adult children and even their offspring living under the same roof. The phenomenon of “Boomerang Kids” who bounce back home when the going gets tough has been blamed for contributing to the erosion of homeownership among Millennials.
The latest data on housing trends suggest that multigenerational trend has outlived its appeal. Perhaps everyone is happier now that the old and the young can now afford their own places to live.
In 2013, 14 percent of al buyers purchased a multi-generational home—one in which the household includes adult children over the age of 18 or grandparents residing in the home or both. These houses were larger and more expensive than average because of the need for space, according to the National Association of Realtor’s’ Profile of Home Buyers and Sellers.
The NAR numbers echo the findings of the Pew Research Center, which found that a record 57 million Americans, or 18.1 percent of the population of the United States, lived in multi-generational family households in 2012, double the number who lived in such households in 1980.
Young adults ages 25 to 34 have been a major component of the growth in the population living with multiple generations since 1980—and especially since 2010. By 2012, roughly one-in-four of these young adults (23.6%) lived in multi-generational households, up from 18.7% in 2007 and 11% in 1980, the Pew study found.
“The most common reason for this living arrangement among Younger Boomers was children over 18 moving back into the house (38 percent), followed by cost savings (18 percent), and health/caretaking of aging parents (15 percent),” said Pew.
Now the trend may have suddenly turned. The percentage of homes purchased to accommodate both aging parents and aging children declined in 2014, according to the latest NAR profile.
The percentage of multigenerational home buyers slipped from 14 to 13 percent. Among those the parentage that bought a larger home to accommodate adult children who have returned home slipped from 24 to 23 percent. Those who bought a multigenerational home to take care of aging family members fell from 20 to 18 percent.
Whether or not the slow migration of young people back into independent living is a fundction of the improved economy is debatable. “It seems highly likely the decision to move out will be more nuanced and idiosyncratic than the decision to move in: a period of financial distress may force an individual to move in with a parent, but a return to financial solvency does not necessarily force, or even create a sense of urgency for an individual to move out,” they said in a paper published last month by the Federal Reserve. (see Why Boomerang Kids Bounce Back).
As for the decline in aging parents at home, the reason is more likely economic—especially the rising price of housing. In the past 21 months the median price of homes has risen more than 15 percent. Among larger, more expensive homes demand has been brisk and prices have risen as move up buyers came out of hibernation after nearly a decade of negative or low levels of equity to the point where they could afford a larger home.