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Demand Rises For Properties Designed For Multigenerational Families

Michael Cox and Aimee Norwood, married baby boomers, sold their home and were about to sign a contract for a newly built house in Virginia when their lives took an unexpected turn.

“My stepfather’s health declined quickly and he passed away while we were deciding on a home,” Cox says. “We realized that my mother would be ready to downsize and that we wanted her to be closer to us.”

Cox and Norwood opted to upsize rather than downsize and bought a house in the Executives collection by Toll Brothers in the Lenah Mill development in Aldie that includes an optional suite of rooms The couple estimates that the addition cost about $60,000, including design upgrades chosen by Cox’s mother, Janice Charlip.

“My mom came to the design center to pick out the finishes she wanted because we all see this as her own space to live in the way she wants to live,” Cox says. “It just happens to be attached to our house.”

Cox, Norwood and Charlip share the home with the couple’s two daughters, ages 11 and 12, and the family dog, who Cox says is the only dog his mother has ever liked. Cox’s two adult children from a previous marriage are frequent visitors along with their friends, and the approximately 6,000-square-foot home accommodates everyone.

Although extended families living under one roof is common in various cultures, the inability of many people to get on their feet after the recession and the increasing longevity of Americans have boosted demand for homes that accommodate several generations. Since 2011, when Lennar introduced its “NextGen” model designed specifically to meet the needs of multigenerational households, the company has sold more than 3,000 of the homes in 13 states.

New homes target multigenerational families.  In-law suites allow grandparents to interact with their kids and grandkids or have privacy.

“We came up with the idea of the NextGen home in Arizona, which was among the hardest-hit markets during the downturn,” says Kim Ashbaugh, director of NextGen brand management for Lennar. “We would see multiple cars in every driveway because there were so many recent grads from local colleges who couldn’t get a job, plus a lot of retirees who chose to move there and were facing higher expenses than they anticipated.”

According to the 2015 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends Report , 13 percent of all home purchases in 2014 were by a multigenerational household, consisting of adult siblings, adult children, parents and/or grandparents. A 2012 Pew Research study said the number of people that year living in multigenerational family households reached a record 57 million, double the number in 1980.

The biggest reasons for a multigenerational purchase, according to the NAR report, were cost savings (24 percent) and adult children moving back into the house (23 percent). Younger boomers represented the largest share of multigenerational buyers, at 21 percent, with 37 percent of those saying the primary reason for their purchase was because of adult children moving back home.

Meeting multiple needs…

Although NAR’s survey indicates that multigenerational homes are primarily for adult children moving in with their parents, Lennar’s research shows that 55 percent of its buyers nationwide are purchasing a NextGen home with the intent of bringing an aging parent into the residence, Ashbaugh says.

“We were surprised that only about 7 percent of families were buying these homes to make it easier for their adult children to move in,” she says.

The Orchard model of Bulle Rock is Lennar’s multigenerational single-family home in Havre de Grace, Md. The in-law suite has a kitchenette and a living area.

Mark and Jennifer Ralston, who own a NextGen home in Bulle Rock, a planned community in Havre de Grace, Md., recently moved into their home with Mark’s parents.

“My mother has been diagnosed with pancreatic cancer and although my father is healthy now, we liked the idea of buying a place where he could live with us in the future,” Mark Ralston says. “We weren’t looking hard, but last summer we stopped into the model homes at Bulle Rock and realized it was perfect for us.”

Jennifer Ralston’s wish list for their home included a walk-in closet, a dining room, a screened-in porch and an area for her father-in-law.

“This home had it all, so we put a deposit down that day and when we called Mark’s parents to talk about it as a future plan, they decided they would both come live with us as soon as the house was built,” Jennifer Ralston says.

Mark Ralston says the exterior door is great to have for a home health aide to care for elderly relatives.
“My parents come and go as they please and they really value their privacy and independence,” Mark Ralston says. “They open the interior door when they want to be with us but they also are sensitive to our privacy.”

The NextGen homes vary in price, from the $180,000s to more than $1 million, depending on the location, the model and the options, Ashbaugh says. The NextGen Orchard model at Bulle Rock starts at $409,990.
Buyers choose multigenerational homes for a variety of reasons such as finances, cultural norms or just because they want to be with their extended family as much as possible, says Eric Anderson, Virginia division president for Toll Brothers.

Flexible floor plans…

Two key elements of every home designed for multiple generations are privacy and flexibility.

“The NextGen home is designed so that you can use the extra space any way you want, not just for family members,” says Rod Hart, Maryland division president for Lennar. “We’ve had buyers turn it into a cool bar, a yoga studio and a sound studio.”

These new multigenerational designs, while varying from one builder and one location to another, all have a separate exterior entrance as well as an interior door to the rest of the house to allow for privacy and independence along with a close connection to the family.

Bruce and Susan Gatti, who bought a single-family Miller and Smith house in the One Loudoun development in Ashburn this year, added an optional studio apartment above the garage.

“Our son Travis, who’s 26, is a special-needs adult and we always hoped to find a place where he could have some independence yet be close to us,” Bruce Gatti says. “We like the neighborhood because he can walk to work and to other places. He has his own bedroom and bathroom and a kitchenette and we added a separate washer and dryer so he can be more independent.”

Although the Gattis’ house is slightly smaller than the one they sold, it has six bedrooms, including four on the upper level of the main house, one in the studio and one on the lower level.

About 25 percent of buyers at One Loudoun have added the studio apartment above the garage, says Kim Ambrose, vice president of marketing for Miller and Smith.

“The D.C. market is very multicultural and diverse, and many of these groups are looking for homes that can accommodate their extended families,” she says. “Many have family members who visit for six months or longer, and we kept getting requests for first-floor bedroom suites. We also knew that there was a segment of the market looking for accommodations for grown children who were moving back in with their parents for financial reasons or other reasons.”

Anderson says that flexibility is essential for people who plan to age in place.

“While the adults are upstairs now with their extended family in the addition, eventually the adults can move to the first floor and not have to leave home as they age,” Anderson says. “People like the flexibility and the fact that they aren’t relegated to the basement or cramped into a small space that was originally designed to be a study.”

Anderson says that about 25 percent of buyers at Lenah Hill add the multigenerational suite, which Toll offers on its Executives and Estate collection houses from Virginia to Boston. The option also is available on other types of homes and in other communities nationwide.

Design challenges…

Lennar’s NextGen home, available in 13 states, has 120 floor plans to choose from, Ashbaugh says.
“One challenge is that we normally need a lot that’s 70-feet wide to accommodate this home, which makes it particularly hard to build and expensive in areas closer to cities where land prices are higher,” Hart says.

“We made a slightly smaller version at Bulle Rock with our Orchard model and it’s the number one seller out of the six models we have there.”  Lennar’s Orchard model has 2,748 square feet, with 500 square feet allocated to the NextGen suite.

“Lennar’s philosophy is to include everything, so in our NextGen homes, we include a kitchenette with a full-size refrigerator and a dishwasher so you can fully live in this space as your home,” Hart says.

He says the company plans to introduce a model at St. Charles in Charles County, Md., that requires a slightly smaller footprint.

Anderson says his company’s design for multigenerational living has evolved over time from a suite converted from living space on the main level to an almost separate apartment.

“While turning a living room and powder room into an in-law suite served the purpose, it didn’t offer the sense of privacy and independence that most buyers want,” he says. “The challenge was finding the space to make an apartment without compromising the space inside the main house.

We took the footprint of a two-car garage and turned it into a private space with a separate entrance as well as a door into the main house.”

The Toll Brothers’ addition, like the one Cox and Norwood chose, includes a bedroom, a full bathroom, a sitting area, a large walk-in closet and a kitchenette. The configuration even allows for an optional private outdoor living space for the apartment.

“Buyers can convert the kitchenette to a full kitchen or to a bar and they can add a bay window or a bathtub instead of the walk-in shower,” Anderson says. “Plus, the buyers can choose between hundreds of designs for the tile, the flooring and the fixtures.”

The next challenge for multigenerational home architects is to design a smaller version of these houses.

Miller and Smith’s architect found that with the rear garage configuration of the homes at One Loudoun, it was relatively easy to design a bedroom suite above the garage. The suite, which adds more than 400 square feet to the home, costs $29,000, plus $5,500 for the bathroom and $8,500 for the kitchenette, for a total of $43,000.

“The challenge is to create private access and private space without losing too much space in your core rooms,” Anderson says. “Right now, the multigenerational options are available on homes with 3,000 to 10,000 square feet. The option adds about 500 square feet.”

Toll Brothers plans to introduce a smaller multigenerational model in the next few years.

Financing a multigenerational home…

Although finances are not the only reason some families choose to live together, the arrangement can be mutually beneficial, says Shelly Church, senior vice president of investments at Raymond James financial services in Naples, Fla.

“Many older people find that the cost of living in senior housing is more than they can afford, and Medicaid is very difficult to qualify for because you have to have no assets at all,” Church says. “In most cases, the main buyers pay for a multigenerational home and then their parents pay a little rent out of their Social Security benefits to help with expenses.”

Lennar anticipated that families would buy NextGen homes together, but Ashbaugh says the majority of sales are to one generation of buyers.

Church says co-ownership of the property could run into legal and tax complications and recommends hiring a lawyer to protect everyone’s interests. She says parents who opt to contribute a down payment should equalize the investment with their other children in some way so that the estate is evenly divided.

Mark Ralston’s parents made the down payment on their multigenerational home rather than pay utilities or rent.

“My parents were paying $4,300 a month in their retirement complex in Chicago, so this is great for their retirement cash flow,” Ralston says.

Lennar’s surveys of NextGen buyers have found that at least 50 percent say they are saving money with their new living arrangement because of reduced child-care, elder-care and transportation costs, as well as shared utility costs, sometimes $5,000 or more.

“My mother volunteered to pay the extra money that the multigenerational configuration cost, and she also calculated the monthly cost for her utilities,” Cox says. “The important thing is that there’s no feeling of financial burden on either side. It’s just a convenient way to be co-located.”

Hart says multigenerational homes can be economical and functional through various life stages and family dynamics.

Says Anderson: “Multigenerational homes change the way a family lives and changes a community. They’re building a lifestyle of shared experiences in communities with amenities for every age.”