Homeownership Trends Among Multigenerational Households
The homeownership rate for multigenerational households reached 74.2% in 2022, surpassing the rate for all other family households, which stood at 73.9%. This marks a significant shift from 2012, when the homeownership rate for multigenerational households was only 69.3%, falling behind other family households at 71.3%. This increase of 5 percentage points over the past decade highlights the growing financial resilience of multigenerational families in the face of economic challenges, including rising home prices and interest rates.
What Defines Multigenerational Households?
Multigenerational households are defined by the Census Bureau as homes where three or more generations live together. The growing trend of multigenerational living reflects the broader shifts in family structures and economic factors that influence homeownership, particularly the ability to pool incomes and share living expenses.
Factors Contributing to the Rising Homeownership Rate
A key factor driving the increase in homeownership for multigenerational households is the availability of pooled capital. With multiple generations contributing to household income, these families have had an advantage in meeting the financial demands of homeownership. This trend was especially pronounced during the period of low interest rates in 2021, which made it easier for multigenerational households to purchase homes despite rising home prices.
The median family income for multigenerational households has also increased significantly over the last decade. In 2012, the difference between the median income of multigenerational households and other family households was only $1,000 ($63,643 vs. $62,633). By 2022, this gap had widened to $11,778, with multigenerational households earning $103,501 compared to $91,723 for other family households. This substantial income increase has provided multigenerational households with the financial flexibility to afford higher home prices.
Homeownership Rates Across Household Types
While multigenerational households saw the most significant increase in homeownership rates, other household types also experienced growth:
- Other family households, which include married couples with no children, increased their homeownership rate by 2.6 percentage points, reaching 73.9% in 2022.
- Married couples with children also saw a solid increase in homeownership, with their rate rising by 4.5 percentage points from 73% to 78% over the decade.
However, the married couples without children category showed signs of stagnation. This group saw a decline in homeownership for a few years before stabilizing at 84%, still the highest among family households.
Home Price-to-Income Ratio and Housing Affordability
The home price-to-income (HPI) ratio for multigenerational households remains more favorable than for other family households, despite the increase in home prices. The median home value for multigenerational households rose significantly from $165,000 in 2012 to $400,000 in 2022. In comparison, other family households saw their median home value rise from $180,000 to $380,000 over the same period. While multigenerational households paid about $20,000 more for a home, their higher household income helped maintain a lower HPI ratio, making homeownership more affordable for them compared to other family households.
This ability to leverage pooled income has allowed multigenerational households to better navigate rising home prices, especially in areas where housing costs are particularly high. The study also found that states with a higher share of housing cost-burdened households (those spending more than 30% of their income on housing) tended to have a larger share of multigenerational households, suggesting that income pooling helps mitigate the challenges posed by higher housing costs.
Conclusion: The Financial Resilience of Multigenerational Households
The increase in the homeownership rate for multigenerational households demonstrates their growing financial resilience and adaptability in a shifting housing market. By pooling incomes, these households have been able to capitalize on favorable mortgage rates and rising incomes to secure homeownership, even in the face of rising home prices. The trend also highlights the broader structural changes in family dynamics, with multigenerational living becoming a more common and practical solution to housing affordability challenges.
As housing affordability continues to be a pressing concern, the success of multigenerational households in increasing their homeownership rates provides valuable insight into how family structures can help mitigate financial pressures. For policymakers and builders, this could signal the need for housing solutions that support multigenerational living and further promote income pooling as a strategy to navigate the complexities of homeownership in today’s market.