Embracing Multigenerational Living in Denver
For many homebuyers, multigenerational living used to be considered an option of last resort: it was a route families took only when they needed to ride out a financial storm or care for ailing family members. But that mindset is on the decline: A growing number of families now say that they are embracing multigenerational living and moving in together by choice.
In fact, research by the National Association of Realtors (NAR) found that the share of multigenerational home buyers rose to 14% in 2022––close to an all-time high.1
Buyers cite a multitude of reasons for choosing a multigenerational home, including saving money on living expenses, pooling resources, taking care of very young or aging relatives, and spending more time with family. “Multi-generational home buying is a way for families to care for one another, support one another, and often buy a home that may have been previously out of reach,” writes Deputy Chief Economist Jessica Lautz in a blog post about the trend.1
Living with extended family has become especially popular in recent years as younger generations face higher home costs and seniors embrace aging in place. According to Pew Research, the number of Americans living in a home with at least two generations of adults has more than quadrupled since the 1970s.2
For many families, the benefits are substantial. Research shows that people who live in multigenerational homes are healthier and tend to live longer. They also enjoy more financial security. Plus, research by Pew found that people who live with relatives are more likely than not to say that it has been a positive experience.2,3
That’s not to say that multigenerational living is easy: It can also be stressful––especially if you choose a home that isn’t suited for a larger family. The key to making it work is to pick a home that can accommodate young and old alike without requiring you to sacrifice comfort or privacy.2,4
Here’s a closer look at multigenerational living, along with tips for finding a home that’s suitable for a diverse group.
THINGS TO CONSIDER BEFORE BUYING A MULTIGENERATIONAL HOME IN Denver
Before embarking on your search for a multigenerational home in Denver, it’s crucial to have a family discussion to align on your house preferences. Have you outlined your new home requirements? Are there any compromises that everyone can agree on? Have all concerns regarding the move been addressed?
It’s beneficial to articulate the reasons behind purchasing a multigenerational home and how each family member stands to gain. While some families opt for multigenerational living to support relatives and share responsibilities, others aim to combine resources to afford a more desirable property or reduce expenses such as childcare or senior care.
Take, for example, homeowner Jian Huang, who initially bought a multigenerational home to assist her elderly mother. This decision not only helped her care for her mother but also resulted in significant annual savings of $25,000 to $40,000. Huang shared with Apartment Therapy, “It makes so much sense financially and emotionally that we would not have it any other way.”5
In addition to short-term considerations, it’s essential to evaluate potential long-term issues like accessibility and financial implications. For instance, if some family members are approaching retirement age, features like steep stairs or narrow hallways could pose challenges in the future. Similarly, while a lavish home with amenities like a pool may be appealing upfront, it could demand a substantial long-term budget for maintenance and upkeep.
If you haven’t already had these conversations, schedule a family meeting to address these aspects collectively. We can assist by conducting individual interviews with family members and guiding you on navigating today’s real estate market.
WHAT TO LOOK FOR IN A MULTIGENERATIONAL HOME IN Denver
Once you’ve outlined your preferences and requirements for a new home, the next step is to create a budget together to determine your affordability in the Denver market. To prevent any financial strain on your family members, take a holistic approach to budgeting for your new home’s purchase and ongoing maintenance.
Aside from budget considerations, factor in the home’s size and layout requirements. Generally, homes offering ample space for privacy are deemed more suitable for multigenerational living, particularly when young children are involved.4
However, the ideal layout and square footage will vary based on your family’s dynamics and preferences. While some may be comfortable sharing spaces, others might require separate areas for relaxation. Various housing options to explore include:
- A large home with plenty of rooms and at least one or more ensuite bathrooms.
- A home with an accessory dwelling unit (ADU), such as a basement apartment.
- A multifamily unit, such as a duplex.
For home buyers looking to age in place, a property in Denver with a separate ground-floor unit, such as a backyard ADU, could be the perfect solution for comfort and practicality, according to real estate expert Sheri Koones. It provides older individuals with the option to avoid moving into costly assisted living facilities as they age, as mentioned in an interview with Realtor Magazine.6
Another alternative to explore is a property that allows for expansion or conversion into multiple units. However, constructing a new accessory unit or remodeling an existing space can come with a substantial price tag. During property visits, our team will assist you in evaluating potential costs and determining whether it aligns with your investment goals. Additionally, we can introduce you to a reputable contractor specializing in renovations.
HOW TO PURCHASE A MULTI-GENERATIONAL HOME
Buying a property with family members can present complexities, especially when applying for a mortgage together. Surprisingly, it can sometimes be easier to qualify for certain mortgages as a group rather than as an individual.7
It’s advisable to consult with a mortgage lender or broker to seek guidance on the best course of action for your particular circumstances. We are here to assist you in connecting with a professional who specializes in co-buying arrangements.
While there is technically no set limit on the number of co-borrowers allowed, some lenders may have stricter lending criteria than others. For instance, conventional lenders typically limit co-borrowers to a maximum of four per loan. If you intend to purchase a home with a larger group, you may need to explore alternative lending options.7
Additionally, your creditworthiness will significantly impact your mortgage eligibility and purchasing power. It is crucial for all parties involved to check their credit scores promptly. Reviewing your credit reports and scores will not only provide insight into your current standing but also highlight any rectifiable issues, such as inaccuracies in credit reports or excessive credit card debt.8
When deliberating on your homebuying budget and strategy, consider the following collectively:
- Who will be on the mortgage?
- What about the title?
- Would including everyone on the mortgage be beneficial for your mortgage rate?
- For those who don’t qualify for the mortgage or have a lower credit score, can you make other arrangements so that they can still financially contribute?
Next, it’s important to consider potential tax and estate planning implications of your home purchase and what may occur if some family members later decide to withdraw from the arrangement.9
To ensure you are well-informed, we recommend speaking with a licensed professional. Feel free to ask us for a referral to a legal professional or an accountant who can offer guidance.
BOTTOM LINE
Investing in a multigenerational home is increasingly popular for a good reason: it presents an opportunity to pool resources and purchase a supportive home for more than just your immediate family. Beyond financial considerations, it can also enhance overall well-being by reducing isolation and fostering a sense of community.10
If you are contemplating multigenerational living, reach out to us for a consultation. We are here to discuss potential options with you and help you visualize your ideal living situation.
This content reflects an opinion and is provided for informational purposes only. It does not constitute financial, legal, or tax advice. Please consult the relevant professionals for advice tailored to your specific needs.
Sources:
- National Association of Realtors – https://www.nar.realtor/blogs/economists-outlook/all-in-the-family-multi-generational-home-buying
- Pew Research Center – https://www.pewresearch.org/social-trends/2022/03/24/financial-issues-top-the-list-of-reasons-u-s-adults-live-in-multigenerational-homes/
- SSM – Population Health – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5769098/
- Better Homes and Gardens – https://www.bhg.com/what-to-look-for-in-a-multigenerational-home-8409277
- Apartment Therapy – https://www.apartmenttherapy.com/multigenerational-homes-37412085
- Realtor Magazine – https://www.nar.realtor/magazine/real-estate-news/home-and-design/all-under-one-roof-trends-in-multigenerational-living
- Bankrate – https://www.bankrate.com/mortgages/how-many-names-can-be-on-a-mortgage/
- Experian – https://www.experian.com/blogs/ask-experian/what-credit-score-do-i-need-to-buy-a-house/
- Kiplinger – https://www.kiplinger.com/retirement/estate-planning-for-multigenerational-living-arrangements
- Institute for Family Studies – https://ifstudies.org/blog/multigenerational-living-is-it-a-solution-for-our-aging-population