Multigenerational Homes: Solving For Affordability, Care And Retirement

Multigenerational housing is increasingly being embraced by Millennials and Baby Boomers seeking to address housing affordability, growing caregiving needs, and extending retirement savings and security.

Many younger couples struggle to access the housing market while balancing the demands of raising children and anticipating caring for their aging parents. At the other end of adulthood, Baby Boomers are seeking ways to extend retirement savings and plan for their future care needs. Instead of the often-discussed generational warfare in America’s tight housing market, peace may be breaking out between sandwiched Millennials and their retired Baby Boomer parents in suburbia. Together, they are finding solutions for their individual challenges through multigenerational living.

The Rise of Three Generation Households

According to the U.S. Census Bureau, six million multigenerational homes—defined as three or more generations living together—accounted for 4.7% of all households in 2020, up from 3.7% in 2000. Among family households specifically, this figure rises to 7.2%, representing an increase from 5.1 million such households in 2010.

This shift isn’t merely a statistic—it represents a fundamental rethinking of family living arrangements in response to economic pressures and caregiving needs. According to Jessica Lautz, Deputy Chief Economist of the National Association of Realtors, “Multigenerational home buying has risen to an all-time high of 17% of home buyers.”

Lautz explains that “Pooling finances and resources are especially important when childcare and elder care are at play. Parents may have an extra hand to help children, while they are ensuring safety and companionship for older family members.”

“Since COVID, we’ve seen twice as many buyers explicitly planning for multigenerational living compared to pre-pandemic levels,” notes Sammy Lubeck, a Chicago-based real estate agent. “The benefits of pooling financial resources to secure larger homes while providing built-in childcare and elder support have created a powerful incentive structure.”

Finance Meets Family Values

The driving forces behind this trend blend practical considerations with evolving family dynamics. According to the Pew Research Center, 40% of Americans cite financial issues as their primary motivation for multigenerational living arrangements, while 33% point to caregiving needs.

The demographic profile of these homebuyers reveals what might be described as the “sandwich effect” influencing their home buying decision. According to the National Association of Realtors, multi-generational home buyers are significantly more likely than average to have children under 18 living at home, with 37% reporting having at least one child under 18 residing in the home. Even more telling, among those who cite caring for aging parents as their primary reason for purchasing a multi-generational home, 29% also have children under 18 in the household.

Financial pressures further compound these challenges. About 17% of multi-generational buyers carry student loan debt, with a median balance of $30,000—an additional financial burden that makes pooling resources even more attractive.

Moreover, for Millennials facing an increasingly unaffordable housing market, combining resources with parents can transform an impossible dream into an achievable reality. Simultaneously, Baby Boomers can extend their retirement savings while maintaining independence within a supportive family structure.

Lubeck observes that, “Multigenerational living allows families to purchase homes in desirable neighborhoods that might otherwise be out of reach,” Lubeck explains. “When you combine two household incomes—often with one set of parents contributing substantial equity from a previous home—the purchasing power increases dramatically.”

Home Design Preferences Reflects Changing Needs

The multigenerational housing boom is reshaping not just who buys homes, but which homes they buy and how they modify them. Key features facilitating aging-in-place have become major selling points for older buyers and younger families considering the possibility of aging parents moving into the home. These architectural priorities represent a profound shift from aesthetic considerations alone to functional design that anticipates life transitions—a recognition that homes must serve as both vibrant family centers and accessible, safe places that support residents as they age.

Lubeck says that many of the frequently requested features include:

• First-floor bedrooms or flexible spaces that can be converted into an older parent apartment
• Accessibility features in bathrooms, particularly walk-in showers
• Adjacent powder rooms with nearby closets that allow for future bathroom expansions
• Main floor flex spaces that can serve multiple purposes as family needs evolve

In the Chicago housing market, “The biggest ‘must-have’ is either a bedroom, office, or convertible flex space on the main level,” notes Lubeck. “If a main level bedroom isn’t feasible, homeowners are looking at options like elevator installations for future needs.”

Ranch Home Renaissance

No housing style better illustrates the multigenerational shift than the ranch home, which has experienced a remarkable resurgence in popularity, particularly in affluent suburbs. Once considered dated, these single-level dwellings now command premium prices specifically because they eliminate stairs—a major consideration for aging residents.

Market research has confirmed this shifting preference. A March 2024 survey conducted by Coldwell Banker Real Estate indicates that ranch homes have surpassed all other architectural styles to become buyers’ most desired home design. The appeal crosses generations but shows particular strength with retirement age homebuyers—21% of those 55 and older now identify these single-level residences as their ideal “dream home,” elevating ranches from practical choice to aspirational living.

This renewed interest in ranch homes reflects how demographic trends and financial pressures on Millennial home buyers and retired Boomers reshape market preferences. In areas with limited inventory, buyers are willing to pay significant premiums for larger single-level homes that can accommodate multiple generations.

According to National Association of Realtors Jessica Lautz, “Multigenerational living can help families find workable solutions to the housing affordability crisis, as multiple individuals can contribute to both the mortgage and housing expenses. It may be easier to find a larger home, because inventory is incredibly limited for smaller homes.”

Multigenerational Living Solves the Affordability, Caregiving, and Retirement Puzzle

Real estate professionals increasingly view the multigenerational housing trend as reflecting a fundamental reevaluation of how families can simultaneously leverage their most significant asset—their home—to address multiple financial and care challenges.

“I believe this trend will continue to grow,” predicts Chicago’s Lubeck. “The benefits of pooling funds to secure larger homes, providing in-home childcare, looking after aging parents, and fostering a strong sense of family connection are powerful incentives.”

Beyond the financial advantages, multi-generational living offers families emotional support, stronger intergenerational bonds, and shared caregiving responsibilities. Aging baby boomers not only improve their financial security well into their retirement years but often find renewed purpose in contributing to family life. There may be generational warfare in the housing market, but some families have found a negotiated peace that works.