Are Gen Xers Buying Homes with Multiple Generations in Mind?

In their heyday of the 1990s, Generation X were the progenitors of modern cool: edgy, media-savvy, a tad disaffected and very independent.

Today, many Gen Xers, typically those born between 1965 to 1976, are finding themselves in the unique positon of being the “sandwich generation”—nestled between their Baby Boomer parents and Millennial/Gen Z children. By 2012, an estimated 42 percent of all Gen Xers had a parent age 65 or older and a dependent child, per the Pew Research Center.

With this position comes added responsibilities, which includes consideration of a multi-generational home with enough space to house retiree parents and financially dependent children. An estimated 12 percent of multi-generational households purchased between July 2015 and June 2016 were by Gen Xers, according to the National Association of REALTORSÒ (NAR) 2017 Home Buyer and Seller Generational Trends report. As for their reasons for purchasing a home, 19 percent of Gen Xers said they did so for the caretaking of aging parents and 17 percent said they had children over 18 moving back into the home, per the report.

“We are seeing that when Gen Xers are purchasing a home they are doing so with the expectation of living there for 15 years,” says Jessica Lautz, managing director of survey research and communication, NAR. The preference in having a considerable longevity of stay is in part to suit their family needs, especially multi-generational ones. In essence, families today are “rightsizing.”

Gen Xers are in their peak earning years and thus have the highest income among all generations of buyer types at $106,600, per NAR. They are still cautious buyers, in part from having lived through the housing boom and bust while also still dealing with student debt—in fact, they hold the largest average student loan balances with more than $30,000 outstanding, according to a 2016 Gallup analysis. 

“What makes Generation X so financially unique is that they grew up in a difficult period of transition in the financial services industry,” said Patrick Payne, assistant professor of finance, personal financial planning program, Western Carolina University. This generation was the first to shift from traditional plans to defined contribution plans like 401(k)s, which in turn has made the Gen Xer more “independent and skeptical,” Payne added.

Gen Xers were also the most likely generation to have previously sold a distressed property and the most likely to have desired doing so earlier but could not because their home was worth less than their mortgage, per NAR. 

A stronger job market and a rise in home prices since 2011 “have helped a growing number [of Gen Xers] build enough equity to finally sell and trade up to a larger home,” said Lawrence Yun, NAR chief economist, in a statement. Indeed, Gen Xers purchased the larger homes in median square footage and bedrooms.

“They’re typically looking for floorplans where you can easily house different generations, like a child coming home after graduating college who’s looking for work and an aging parent,” Lautz said. 

Having the sole income in a multi-generational household can pose as a challenge for Gen X homeowners. One potential solution for homeowners: Charge the youngest in the household rent. 

“It’s ok for your kids to pay rent for, say, a basement room,” Payne said. An advantage of having both younger and older generations in the house is helping elderly parents preserve and eventually pass down support to other generations that would have otherwise gone towards housing expenses.

Ultimately, Gen Xers are making the financial sacrifices that will help both their elders and their future generations, and it is this sacrifice that they appear willing to do by putting their entire family under one roof.