The pros and cons of living in a multi-generational household while saving for your own home
Buying a property can present challenges for first-time buyers, who often stick to renting because they can’t afford starter homes. Usually, these first-time buyers are millennials who resort to living with family in multi-generational households while saving for properties of their own.
In this blog post, we’ll explain why it’s so hard for first-time buyers to secure starter homes. We’ll also look at the pros and cons of living in a multi-generational household while you save for a down payment.
Why Are Starter Homes So Expensive?
There are three main reasons behind the steep prices of starter homes.
- The huge demand from millennials who are seeking starter homes.
- The huge demand from investors looking to buy starter properties and convert these into rentals.
- The labour shortages and increasing cost of supplies that home builders are facing. Home builders are often slow to respond to the demand for affordable homes. Instead, they tend to focus on bigger homes that generate more profit.
Demand for starter homes is only on the rise. The home construction market hasn’t met the millennials’ demand for affordable homes, and the next generation is now fast-approaching home-buying age.
So, how are millenials reacting to the shortage of starter homes?
How Are Millennials Approaching the Starter Home Shortage?
Numerous millennials who can’t afford starter homes save up for years before they can set foot on the property ladder. Millennials in this position often approach the problem in one of two ways.
1) Buy Bigger Properties with Friends and Split the Bills
Some young people team up with friends to buy a bigger property and split the bills. This works because when more adults register as co-owners, the combined household income grows. Buying with friends can make it easier to qualify for a mortgage on a larger property and avoid starter homes altogether.
However, lenders use the lowest credit score of all co-signers, so if you’re buying with friends, all parties need good credit ratings. It’s also important that all co-signers complete a written agreement that addresses maintenance, equity, improvements, and exiting the arrangement. Arranging this in advance will save you trouble further down the line.
2) Live with Family in Multi-Generational Households
The real estate market conditions tend to reward buyers who can afford mid-priced homes over starter homes. As a result, an increasing number of millennials are living in multi-generational households while saving for a down payment on a mid-priced property.
Young adults are now the age group most likely to live in multi-generational households. In fact, Homes.com concludes that people in their twenties are more likely to live with their parents than with a partner.
What Are the Advantages of Multi-Generational Households?
Despite the difficulties associated with securing starter homes, there are many benefits of moving in with parents and grandparents.
- Save up: you can often make arrangements that will help to save money for your future home. For example, retired family members may be able to help with childcare to ease childminding costs. Meanwhile, younger adults may be able to care for elderly relatives.
- Share costs and responsibilities: living with family usually means that you can share household costs and tasks. If you live in a multi-generational household, you might be able to save on utility, decorating, maintenance, and food costs, as well as home insurance, property taxes, and homeowners’ association fees.
- Enjoy family time: living in a multi-generational home can allow you to strengthen family bonds, especially as young children can spend more time with their grandparents. Living in a multi-generational household means that family support is easily accessible.
- Security benefits: when multiple people live in a property, it’s more likely that someone will usually be at home. This reduces the risk of burglaries. Many older relatives will particularly appreciate the security of living with family.
What Are the Disadvantages of Multi-Generational Households?
Moving into a multi-generational household is a big step. It’s important to consider the potential drawbacks as well as the benefits before you commit.
- More housework: more people living together means more mess and more tidying, especially if you have children.
- Possible disagreements: some relationships run more smoothly when not contained under one roof. Conflict may arise over parental opinions, finances, and chores. Make sure that everyone is happy with household arrangements before anyone moves in.
- Space constraints: space might become a problem when moving into a parent’s or grandparent’s home. An extension might be necessary to make space for everyone. In this case, you should split costs accordingly. You should also arrange for work to take place at a time that will be convenient for everyone.
- Lack of facilities: often, a young adult moves in with family while saving up for their own home. However, if an older family member is moving in with younger family members, you may need to consider retrofitting work. Your family member may need a stair-lift, walk-in washing facilities, or other equipment catered to physical impairments.
How Can Storey Collective Help?
Our experienced real estate agents know how difficult it can be to secure a starter home. We also know how difficult it can be to decide on the best alternative while saving. We can offer you tailored advice based on your situation, income, and location.
Get in touch and book your free 15-minute consultation to speak with one of our experts.