Multi-generational homes are redefining U.S. housing

Affordability concerns. Aging populations. A desire for mutual support. These undercurrents in American society have pushed multigenerational households to re-emerge as one of the most powerful and persistent trends in the housing market.

This shift is not merely a demographic footnote; it's a fundamental change in the definition of a household that impacts risk modeling, valuation, and capital deployment. And property industry professionals should pay attention.

Economics, demographics, and the "Sandwich Generation"

The rise of the multigenerational home, which is defined as three or more generations living under one roof, is a practical response to overwhelming economic and social forces. Our data and industry surveys point to three primary catalysts:

• The affordability crisis: Data shows that the dramatic escalation in home prices and interest rates has made independent living unattainable for many young adults and challenging for retirees on fixed incomes. Pooling resources allows multiple incomes to qualify for a larger mortgage or split rent, making homeownership more accessible and daily life more manageable.

• ‍An aging population: The number of Americans aged 65 and older is increasing dramatically. This aging demographic, coupled with a preference to forego institutional senior care, is driving the need for elder support. This need is largely borne by the "Sandwich Generation" (often Gen X), who are juggling the care of both their children and their aging parents.

• ‍The boomerang effect: Economic pressures, student debt, and a difficult entry into the labor market mean that adult children are returning home or never leaving. The National Association of Realtors’ data indicates that bringing adult children back home or having them never leave accounts for a significant portion of multigenerational arrangements.¹

The property intelligence paradox

Multi-generational homes present a significant analytical paradox: they simultaneously create greater resilience for the family unit while introducing greater complexity and potential risk for the property.

‍

Valuation and investment

Multi-generational homes are signaling a shift in what buyers value, which directly impacts real estate valuation and investment strategy.

• ‍Paying flexibility premiums: Buyers will pay for flexibility. Properties featuring accessory dwelling units (ADUs), separate entrances, multiple primary suites, and dedicated living areas are commanding a premium because these features make homes more adaptable and appeal to a wider pool of buyers seeking financial flexibility through potential rental income or caregiving space.‍
• Zoning challenges and "missing middle" housing: Unfortunately, the market is still constrained by legacy zoning regulations built for the nuclear family. Investors and developers who can navigate these regulations to provide "missing middle" housing (such as duplexes or homes with legal ADUs) are tapping into a high-demand, high-return segment.

‍

Insurance implications

The rise of complex households creates challenges that standard homeowners policies were not designed for, such as:

• Increased property risk and underinsurance: More occupants typically means more to insure and a greater strain on a home's infrastructure (bathrooms, kitchens, utilities). Failure to update contents coverage can lead to underinsurance in the event of a catastrophic loss.
• Elevated liability exposure: The presence of multiple generations (including young children and elderly adults) increases liability exposure for the household. While standard policies often cover relatives residing in the home, the need for umbrella insurance or specific endorsements becomes critical, especially if outside caregivers or medical professionals are involved.
• The misclassification trap: Insurance carriers often use standardized data. Multi-generational arrangements can be misclassified by adjusters as an "illegal rental unit" or "unreported occupancy," leading to delayed or denied claims. Without granular, property-specific intelligence, carriers face higher Loss Adjustment Expenses (LAE) due to disputes over occupancy and policy interpretation.

Building a profitable future with better data

The multi-generational home reflects shifting American realities. The property intelligence sector must move beyond the outdated nuclear family model. By embracing data that accurately captures the property features like ADUs and multiple primary suites, as well as the true complexity of occupancy, institutions can:

• Accurately price risk and avoid the misclassification trap
• Optimize investment by targeting properties with high adaptability premiums
• Build a more resilient and profitable future for the entire housing ecosystem

Ultimately, success in this new market hinges on data clarity. Cotality's intelligence platform is designed to cut through the complexity of the multi-generational shift, giving insurers, investors, and government partners the precise, property-specific data needed to make informed decisions. We bring data clarity to the property ecosystem, ensuring your strategies are built on resilience, accuracy, and future-proof intelligence.

Ready for accurate property data? Connect with our team.