Real Estate

Making Life with the In-Laws Bearable


Kevin Barnes paid about $280,000 for a newly built home in Orlando this summer, when median prices for existing single-family homes in the area were just $128,000. Yet the 42-year-old chemical salesman thinks he got a good deal. Built by KB Home (KBH), the 2,565-square-foot ranch-style house has a second master suite to accommodate Barnes’s mother-in-law, who lives with the family. “She’s a free baby sitter,” he says. “Day care costs about $200 a week.”

A new kind of home is being marketed to multigenerational households, a category that increased by 30 percent from 2000 to 2010, according to the U.S. Census Bureau. KB Home, Lennar (LEN), and Pulte Group (PHM) are among builders that offer models with second master bedrooms, kitchenettes, and separate entrances. Those features may help lure buyers at a time when new residences are selling at a record slow pace. The number of new single-family homes sold sank to 323,000 last year, the fewest since the Commerce Dept. began tracking data in 1963 and down from a peak of 1.28 million in 2005. “This is a niche area that appears to be solid and growing,” says Stephen Melman, director of economic services at the Washington-based National Association of Home Builders. “It’s a demographic thing.”

An estimated 51 million Americans, or 16.7 percent of the population, lived in homes with at least two generations of adults in 2009, up from 42 million in 2000, according to a recent report from the Pew Research Center. The increase is partly a byproduct of the bad economy. The percentage of men aged 25 to 34 who live with their parents grew by almost a third during the past five years, as so-called boomerang kids returned home from college or the military or lost their jobs, the census shows. Also, aging baby boomers are moving in with their children to save money and help with child care.

A steady stream of visitors toured two of Lennar’s Next Gen models at a grand opening in the Rosena Ranch community in San Bernardino, Calif., on Nov. 5. Prices start at $318,890 for a three-bedroom house with a built-in suite equipped with a kitchen and living room, as well as its own entrance. Mary and Marty Nachman, retirees from Apple Valley, Calif., say the two-unit Lennar home may be preferable to the house they bought in 2007 in one of Pulte’s senior communities. Where they live now, the Nachmans are restricted from hosting guests under 55 for more than two months—a rule that might prevent them from taking in one of their five grown children if they hit a rough patch. “The way things are right now, there are a lot of young adult children who need to move back home for a while,” says Mary Nachman.

While duplexes, granny flats, and guest houses have a long history, the two-homes-in-one models are new for mass-market builders, says Jeff Roos, president of Lennar’s Western region. Lennar unveiled its first Next Gen homes in September in the Phoenix area and expects to offer them in as many as 40 communities by yearend. Besides Phoenix, the company is targeting California’s Inland Empire and Central Valley; Las Vegas is next. These are all areas that have suffered some of the biggest price declines since the U.S. housing bubble burst, so there’s a need for new designs to boost sales. Says Roos: “We think it will compete very well vs. a foreclosure or distressed sale.”

Pulte, the nation’s No. 1 builder by revenue, offers new homes which come with stand-alone guesthouses or the option of converting attached garages to “casitas,” the Spanish word for small houses. Other Pulte features to accommodate extended families include second master bedrooms located on the ground floor, for elderly family members. The builder is stretching the definition of extended family to the limit. Some of its model homes feature a room decorated with a doggie couch, chew toys, and a “dog eye chart” with pictures of a bone, a cat, and paw prints. Scott Thomas, Pulte’s director of architecture, explains: “We heard from our buyers: We have pets and we consider them a part of the family, and we’d rather have space that’s allocated to the pet, just like we would a bedroom for a child.”

The bottom line: Builders have boomerang kids and aging parents in mind as they draw up blueprints for a recovery in new-home sales.

Gittelsohn is a reporter for Bloomberg News in Los Angeles.

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Companies Mentioned

  • KBH
    (KB Home)
    • $17.31 USD
    • -0.03
    • -0.17%
  • LEN
    (Lennar Corp)
    • $41.03 USD
    • -0.35
    • -0.85%
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