More adults live in shared households to save money
Mortgage rates continue to hover near record lows and home prices are strengthening, but are still affordable to most average income earners. Despite these gains in the market, many people still struggle to find affordable housing. Credit conditions remain tight, many Americans lack the savings for a down payment and fears over job security have kept many would-be buyers on the sidelines. Further, rental rates continue to rise to levels that are largely unaffordable for many individuals. In some areas, such as New York, San Francisco and Boston, they are projected to experience double-digit increases over the next year. To combat rising prices, many people are living in shared households.
In 2011, 17.9 percent of people 18 and older lived in someone else’s household, compared to 16 percent at the start of the recession in 2007, according to the U.S. Census Bureau. This translates into 41.2 million Americans who live in a home in which they are neither the householder or the owner’s spouse or cohabitating partner. In many cases, college students, recent graduates and young professionals chose to move back in with their parents.
According to the Census Bureau, Hawaii has the highest percentage of multigenerational households, with 11 percent of families living in this type of home. When broken down by region, the West and South led the list, with 85 percent of states in those areas exceeding the national level, according to NBC News. Southern states included in this percentage are Florida, Georgia, Louisiana, Maryland, Mississippi and Texas. In the West, Arizona, California, Hawaii, Nevada and New Mexico are the states with the highest averages of multigenerational homes.
Benefits of multigenerational households
Moving into someone else's household or a multigenerational home can have benefits, such as helping those residents saving money and pitch in for bills, groceries and other needs. Many young adults say they want to enter the mortgage market one day, but are taking the opportunity to live at home and save money for a down payment one day.
While there are money-saving benefits attached to multigenerational living, there are also some drawbacks. Many homeowners cite lack of privacy as a potential downside, and some owners who are supporting adult children and aging parents have difficulties keeping up with costs if their kids are unemployed. For this reason, most financial professionals encourage parents to urge kids to find part-time work and develop a money management plan to help them save money. In addition, those who are not working are encouraged to contribute to the household in other ways, such as running errands and completing chores.