They say trends are cyclical, and here’s one that’s back in a big way: Multigenerational housing. A longtime norm that faded through the mid-20th century is rapidly returning. And it’s reshaping the American housing market.
This demographic shift presents a unique opportunity for mortgage professionals. By understanding the diverse needs and financial situations within multigenerational households, lenders can cultivate deeper customer relationships, expand their business reach, and foster long-term loyalty.
The numbers tell the story
Census data shows the number of people living in multigenerational family households quadrupled from 1971-2021, reaching 59.7 million in March 2021. That’s roughly 18% of the U.S. population.
This trend is even more sharply pronounced among younger Americans—the so-called “boomerang generation.” According to the Pew Research Center, a quarter of all adults ages 25 to 34 now live in a household with two or more adult generations—and RentCafe’s research estimates that 68% of Gen Z’ers over 18 still live with their parents. Even among millennials, 20% have returned home or never left.
What’s behind the rise in multi-gen housing?
This resurgence of multigenerational living isn’t simply a matter of “going back” to the past. It represents an adaptation to several converging factors:
- Economic pressures: Skyrocketing housing costs, coupled with student loan debt and persistent inflation, have made independent living increasingly challenging, especially for young adults. Sharing expenses and pooling resources within a multigenerational household offers a much-needed financial buffer.
- Caregiving needs: At both ends of the age spectrum, caregiving responsibilities are pushing families together. The high cost of childcare often compels new parents to seek support from relatives. Simultaneously, as the population ages, caring for elderly parents at home has become a common and often necessary arrangement.
- Cultural shifts: While the nuclear family model has long dominated American culture, attitudes are changing. Many are recognizing the benefits of intergenerational support, connection, and shared experiences. Moreover, multigenerational living is more common and accepted in certain cultures, contributing to its overall rise as the demographics of the U.S. shift.
- Life transitions: Beyond purely financial considerations, multigenerational living can provide a valuable support system during significant life transitions. Whether it’s recent graduates launching their careers, new parents adjusting to family life, or individuals navigating job losses or other challenges, living with family can offer stability and emotional support.
How lenders can serve the many faces of multigenerational housing
The rise of multigenerational housing presents both a challenge and an opportunity for lenders. The first task is to recognize that multi-gen housing is not a monolithic demographic but a wide range of scenarios, each with unique financial considerations:
- Recent college graduates staying with parents: Faced with mounting student loan debt and a competitive housing market, many young adults are opting to live with their parents after graduation. This allows them to save for a down payment, improve their credit, and gain financial stability before venturing into homeownership.
- New parents living with relatives: The high cost of childcare is a significant burden for many new parents. Living with relatives can provide much-needed support, both financially and practically. This arrangement often necessitates larger living spaces, leading to renovations, additions, or even the purchase of multi-family homes.
- Middle-aged adults caring for aging parents: As the population ages, more families are choosing to care for their elderly parents at home. This can involve home modifications to accommodate aging in place and specialized financial planning to manage healthcare costs and long-term care needs.
Adapting engagement & offers
Lenders must tailor their communication to address the unique needs of different individuals within the broader multi-gen housing demographic. This could include creating targeted content, hosting educational workshops, or partnering with community organizations.
Moreover, the mortgage products and financing options behind this engagement need to be tailored to these individuals’ unique goals. This could include renovation loans for adapting homes to accommodate multiple generations, home equity solutions to leverage existing assets, and even reverse mortgages to help aging homeowners access funds. By embracing flexibility and creativity, lenders can cater to the unique circumstances of multigenerational families.
Building an enterprise-level strategy for multigenerational housing
The growing multigenerational housing market represents a significant opportunity that deserves more than ad hoc approaches. Lenders cannot leave this opportunity fully in the hands of individual loan officers—they need to establish an enterprise-level strategy that ensures everyone, from loan officers to underwriters to marketing teams, understands the nuances of multigenerational housing and is prepared to engage these borrowers with sensitivity and expertise.
- Invest in training and development: Equip your team with the knowledge and skills to effectively engage with multigenerational borrowers. This includes training on different loan products, financial planning strategies, and culturally sensitive communication.
- Build a network of partners: Connect with other professionals who serve this demographic, such as financial advisors, elder care specialists, and contractors specializing in home modifications. This creates a holistic support system for your borrowers and strengthens your position as a trusted advisor.
- Embrace technology: Leverage technology to personalize the lending experience. This could involve online tools for financial planning, virtual consultations, or digital resources tailored to specific multigenerational scenarios.
- Foster a customer-centric culture: Make sure your entire organization, from loan officers to underwriters, understands the importance of building relationships and providing exceptional service to multigenerational families.
By embracing these strategies, lenders can position themselves at the forefront of this evolving market, capturing a growing share and solidifying their role as essential partners in helping families achieve their homeownership dreams. More than ever, borrowers need trusted advisors who understand their unique circumstances and can offer personalized guidance. The future of lending lies in recognizing these evolving needs and adapting to meet them with flexibility, innovation, and a genuine commitment to customer service. This is a defining moment for the industry, and those who seize this opportunity will not only thrive in the years to come but also play a vital role in shaping the future of housing in America.
