Millennials have diverged from older generations in several important ways. They have different spending priorities than their parents, and those values can even impact the biggest facets of life, including housing. Many younger people are choosing a different path than moving out at 18 and living on their own.
Studies show that intergenerational housing is a growing trend, especially among young people. The number of U.S. adults living in multigenerational households (homes with two or more adult generations) has grown steadily over the past five decades. But the rise is especially noticeable among millennials — in 2021, 25% of adults between ages 25 and 34 lived in multigenerational housing. This represents a 9% increase since 1971.
So, how does this trend affect the market? And what does it say about younger people and their priorities? Are the naysayers right that young adults are just too lazy to strike out on their own?
Or can intergenerational housing be a legitimate solution to a challenging economy and a housing crisis that shows no signs of quick recovery? Are there ways to make this living situation beneficial for everyone involved?
Let’s find some answers to these questions.
Finding Intergenerational Housing Opportunities Amid Crisis
The truth is that multigenerational housing isn’t the end of the world. In fact, it’s been the norm in many European countries for decades. And this trend will probably keep growing in the U.S. as young people continue to find themselves priced out of the housing market and saddled with student debt.
Millennials lived through 9/11 and came of age during the 2008 Recession. They were encouraged to take out massive student loans as companies started requiring college degrees for entry-level jobs in every industry. And their adulthood has been defined by inflation, low-paying jobs, climate change, a global pandemic, market instability, and high living costs — all of which are largely out of their control.
It’s a large-scale problem, and the solution isn’t as simple as making coffee at home or avoiding the temptation of avocado toast. However, multigenerational housing can be an excellent option that provides benefits for everyone involved.
Affordability Isn’t the Only Benefit of Intergenerational Housing
The biggest driver of the intergenerational housing trend is money. For many young people, it’s just not possible to live on their own.
In most places throughout the U.S., full-time workers making minimum wage can’t afford to rent a one-bedroom apartment. The average minimum-wage employee in the U.S. would have to work four full-time minimum-wage jobs or find three roommates to afford a two-bedroom home.
So, many young people see moving home as the only solution. It gives them a chance to live within their means and maybe even save up for a down payment sometime in the future.
Parents can also benefit from having their children move back home. It makes elder care easier, allowing older people to avoid retirement homes for many years. And millennials can avoid the hefty cost of full-time childcare. Grandparents and grandchildren get a chance to build real relationships with each other.
Making a Multigenerational Household Work
How do you make intergenerational housing a positive experience for everyone? It’s all about respect, goodwill, and flexibility.
Before you move back home (or ask your parents to move in with you), set aside time to discuss the situation in depth. Give everyone a chance to offer their opinions and suggestions. Encourage each person to identify their desires and dealbreakers, and then work together to find a solution that works for everyone.
Communication is also key. Make sure responsibilities (financial and otherwise) are clearly defined, and speak up when things go awry. Finally, try to find some common hobbies you can all enjoy together. Maybe it’s something as simple as watching a football game on Sundays — the activity doesn’t matter as much as the intentional decision to enjoy time together.
Intergenerational Housing Shows Resiliency
We might never see the end of news stories about millennials and Gen Zers upsetting the social norms of their parents. But that’s not really news — young people making different choices than their parents is a tale as old as time.
Young people choosing multigenerational housing isn’t necessarily a sign of rebellion or laziness. It can be a smart financial move in a tough economy. And it can be a beneficial living situation for everyone, as long as it’s done right.
If you’re considering moving back home or inviting your parents to live with you, start by establishing some ground rules. Make sure everyone is on the same page in terms of personal boundaries, physical space, and daily schedule. Find a way to give everyone as much autonomy and privacy as possible. And then, just keep the lines of communication open. Make sure everyone feels like they can address concerns or make suggestions to improve the situation.
No one knows exactly what will happen with the economy going forward. Multigenerational housing may be here to stay, especially for millennials who are caring for their kids and parents. But that’s OK — it’s just another sign that young people are willing and able to adapt to new challenges.
Make the Financial Decisions That Work for You
Intergenerational housing is just one example of an uncommon situation that can work well for everyone.
And it shows that when it comes to making financial decisions, there’s not just one “right” path. The key is to make money choices that reflect what matters most to you — even if those decisions don’t reflect the status quo.
If you’re not quite sure how to align your finances with your values, Guiding Wealth can help. Our team of financial planners spend the time to understand your priorities and help you make a financial plan that aligns with them. To get started, schedule a consultation.