What unlikely thing do I have in common with Hilary Clinton?

If you guessed living with an aging parent, you would be correct! 

I remember when I couldn’t wait to move out of my parent’s house and now here I am, years later, my Dad lives in a separate apartment below my house. I’m not alone, more and more, families and friends are buying larger homes, multi-unit homes or homes on larger lots so that they can live with parents, extended family or friends. 

Why the uptick in multi-generational living?

This is happening for a lot of reasons:

  • Housing prices in the Bay Area are very high so buying with others (and who better than family) can be a way to combine resources to purchase a home.
  • Older adults who are on fixed incomes may want to stay in their homes rather than buying another home (i.e., “downsizing”) or going to an expensive retirement community but may wish to offset their costs by sharing expenses with their adult children.
  •  Many Gen X and Millennials who have a difficult time buying or affording housing may opt to share with their parents.
  • Childcare is pricey and parents can benefit if grandparents live nearby.
  • Finally, caring for aging parents who have health issues is easier if they live in closer proximity.  And after all, we usually needed to move away to realize how much we missed being near mom and dad.

Buying a multi-generational home in the East Bay

People who are trying to purchase a multi-unit property here in the East Bay have many options:

Single Family Homes – While this is a very common type of home for the multi-generational family, it can be harder to purchase than you may think. With a limited amount of inventory, the competition can be stiff for single-family homes in the East Bay. On the brighter side, pooling resources can help to strengthen your chances of getting into a home in one of the East Bay communities.

Multiple unit properties – These can be very popular with investors so buyers who wish to owner occupy may be competing with cash buyers or buyers with more resources to do repairs. As a point of consideration, these properties may not have been owner-occupied and could have maintenance issues that owner occupied properties are less likely to have.

Building another dwelling on the lot - Another option that a buyer may explore is making a single unit home into two units or building another house on the same lot of an existing single family home. If you’re thinking of doing this, it’s important to do your due diligence with contractors who are experienced with building a new dwelling from the ground up and who are familiar with the local building codes. There is some promising news on this topic, the City of Berkeley has modified its rules on building accessory dwellings and Oakland is following suit

Buying a tiny home as an addition to a property - Additionally, there are companies like Tumbleweed that offer customized tiny homes, some on wheels, that can be parked in the back of another property. They aren’t supposed to be lived in permanently, but they offer a great living area for longer-term guests and families. Because they are “personal property” and not an actual fixed structure, having them on your property tends to be easier than getting permission from the City to construct a second home on your lot.

Financing Considerations

Financing a multi-unit home purchase or build-out might not be as difficult as you think. Multiple unit properties of four units or less can be financed with an FHA loan. FHA loans can be used with a down payment as low as 3.5% and lenders increase the maximum allowable purchase price when more than one unit is purchased.  There are also renovation financing options with a minimum of 3.5% down that could be used to add a unit.  Homeowners with equity may be able to use their equity to help finance or pay for building a second unit.  Berkeley-based New Avenue Homes is a great resource for local homeowners looking for a guide for everything from financing to design to construction.

Living with family can be a sweet way to lessen costs and help manage health and childcare needs. Although the logistics of buying or creating more than one unit can be different than buying a single family home it not impossible to navigate. With a little knowledge and planning, setting up a multi-generational home can be a win-win for everyone!