Homes Are Super Expensive. Could a Multigenerational Home Purchase Be a Good Solution for You?

These days, buying a home is no easy feat. Not only are property values still elevated, but mortgages remain expensive to sign. While mortgage lenders might lower their rates in 2024 as inflation cools and the Federal Reserve moves forward with interest rate cuts, that's not guaranteed to happen.

If you're interested in owning a home but don't think you can afford to buy one on your own, then you may want to consider teaming up with other members of your family in a multigenerational setup. 

The National Association of Realtors reports that 14% of all home buyers are purchasing multigenerational homes, so it's an arrangement worth looking at if you have other family members who are on board. However, you'll need to weigh the pros against the cons and set certain ground rules from the start.

The upside of multigenerational living

If you can't swing a home purchase on your own based on today's home prices and mortgage rates, then finding a co-buyer could be your ticket to homeownership. It pays to consider making that co-buyer a member of your family.

Multigenerational living offers a lot of benefits. First, it gives you an opportunity to have your children grow up alongside older family members for an even bigger support network. It might also mean having access to child care and other help when you're trying to juggle a career with things like after-school activities and play dates. 

Also, in a multigenerational setup, you have people to share in the work of maintaining a home and household. This doesn't just mean you can split maintenance tasks like staining the deck every season and pressure-washing the patio. It also means that on a day-to-day basis, you can share the load of cooking, cleaning, and keeping things running smoothly. 

The downside of multigenerational living

Of course, one major drawback to a multigenerational housing setup is a lack of privacy. Let's say you, your spouse, and your two children decide to buy a home with your parents. That means they'll be there all the time. You and your spouse might, at some point, come to bemoan the lack of personal space that ensues. 

Also, things could get complicated if someone decides they want to sell their stake in the house, or that they can no longer afford the home in question. Granted, a good way to work around this is to set up a legal document at the time of your home purchase detailing what would happen under such circumstances. 

But still, it's one thing to have to enforce a contract when you're buying a home jointly with an acquaintance. It's another thing to have to enforce a legal document on your own parents.

Set ground rules from the start

From a logistical, emotional, and financial standpoint, there's much to be gained from a multigenerational housing arrangement. If you've been struggling to buy on your own, this is an option worth considering.

But if you're going to go this route, set ground rules from the start. In addition to creating a clear legal contract, talk to the people you'll be buying with about expectations in terms of things like upkeep, housework, and even matters of privacy.

Also, try your best to find a home that's conducive to multigenerational living. An optimal arrangement may be one where you can all share a roof but maintain some degree of private living, such as if a home has a finished basement you can convert to a separate apartment. 

Of course, some people manage to pull off multigenerational living just fine in smaller quarters. But if you're able to find a home that gives you more room to spread out, you may end up a lot happier for it.