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Three Generations, One Roof


Stacey Egan was nine months pregnant with her third child when she called off her family's search for a home in Rye, N.Y., a New York City suburb where the median-priced home now sells for over $1.3 million. The Egans had outgrown the two-bedroom condo they had purchased in Rye in 2000. But they were tired of watching $850,000 fixer-uppers get snapped up before they even had a chance to bid. "Anytime an affordable house would come on the market, it would sell in a day," she says.

So about a year ago, Egan and her husband, Michael, a compliance officer for a Wall Street firm, did what a growing number of families are doing: They moved back in with (her) mom and dad, whose five-bedroom empty nest in Rye has plenty of room for a growing family.

Yes, the extended family is making a comeback. In many cases, generations are squeezing under one roof, sometimes by refurbishing basements or building extensions for the in-laws or grandkids. They're also living in family compounds that feature garage apartments or guest cottages. In response to surveys of homebuyers, builders are offering second master bedrooms and "accessory" units, such as so-called granny flats, and guest homes in a growing number of mainly upscale housing developments. And Dallas-based CTX Mortgage () offers a mortgage for multifamily households in Florida that considers the senior generation's income when qualifying -- without requiring them to be listed on the loan.

According to the latest U.S. Census data, the number of households with three or more generations living under one roof grew 38% from 1990 to 2000, vs. 8% for those with just two generations. Doubling up is most common in states where home values have soared as well as in places with large populations of immigrants from countries accustomed to multigenerational living. Extended households now account for 5.6% of California's total, vs. almost 4% nationally. And 8.2% of Hawaii's households are multigenerational. With the affordability of starter homes at a 15-year low, the pressure to double up is likely to remain.

BETTER LIFE

Those living in three-generation households say the arrangement can solve a host of financial and practical problems. Most obviously, money saved on rent can fund a downpayment on a separate home later. It can also allow breadwinners to stay home with kids or start businesses. Some say they enjoy a better quality of life, with shorter commutes and access to better schools. One extended clan discovered that for the price of two three-bedroom homes on quarter-acre lots in Atherton, Calif., they could jointly finance something far more grand -- a five-bedroom place on an acre with a pool and a 1,200-square-foot guest house for the grandparents. "In our case, one plus one equaled three," says Peter Clark, chief financial officer at a Silicon Valley technology firm whose family lives with his in-laws, Richard and Ann Dorst.

Families also say that by living together, they're better able to meet evolving needs, from child care to eldercare. Clark says his in-laws at times have been "like second parents" to his three daughters. But "when they get older, we'll be there if they need anything."

Such arrangements have lots of challenges, however. As with marriage, the division of household bills and chores can be sources of conflict. There are privacy issues. Families who live together permanently may also need to work out an estate plan -- without stepping on other heirs' toes. When children are involved, parents and grandparents may have to resolve differences over child rearing.

Moving back to the nest can be hard on the ego, too. "The stereotype is that adults who live with their parents are losers," says Jeffrey Mordan, a private-school art teacher whose family moved into his wife's childhood home in Hill Town, Pa., two years ago, in part to finance the master's degree in teaching he'll earn in 2007. Sometimes, too, it's easy to lapse into past patterns, with parents dictating rules and adult children reverting to childlike roles.

If you're thinking about giving mom and dad the guest room or suspect you may soon be sharing close quarters with a boomerang child, here are tips from families living in extended households.

Make a Plan

Long before purchasing a family compound or calling a moving van, hash out a written plan for dividing the finances, chores, and space, advises John Graham, professor of international business at the University of California at Irvine's Paul Merage School of Business, who is writing a book with his sister, Sharon Niederhaus, about extended family living. Other topics might include house guests and parties.

If you'd prefer a temporary arrangement, agree on a timetable. Grandparents should be clear about how much child care they're willing to do. Parents should ask the household's other adults to respect their approach to child rearing.

Privacy

Families say an extended arrangement works best when each branch can retreat to its own space. Separate units are ideal. But in many locales, zoning laws or deed restrictions prohibit guest homes and granny flats, says Andy Gianino, president of The Home Store, a Whately (Mass.) builder of custom modular units. Additions may also trigger an increase in property taxes or insurance premiums.

Families who share single-family residences can enhance privacy by occupying bedrooms on separate floors or opposite ends of the house. Mordan's in-laws, Fran and Terry Gery, converted a ground-floor multipurpose room into a master bedroom suite -- a project that's been on their "to do" list for years. The Mordans and their two young children have the three bedrooms upstairs.

For families who live close by, knock before popping in. You can even reserve specific times for the immediate family to be alone. "Because of our busy schedules, dinner was the only time my husband and I could be with my daughter as a family. Fortunately, my mom did not feel she had to be part of our dinner," says Jill Ridky-Blackburn, whose mother, Lillian Ridky, now 90, moved into attached living quarters on the family's Chapel Hill (N.C.) property about 11 years ago.

Finances

There are many approaches to dividing the bills. The Clarks and Dorsts evenly split fixed costs, such as property taxes and insurance. Why? Each owns about 50% of the property. But they allocate utility, phone, and cable bills on a per capita basis. In some cases, the generation with greater resources writes the checks. Parents might waive rent to help a child maximize savings and move out sooner. The key, according to Niederhaus, is for everyone to contribute, be it rent or yardwork.

Of course, even the closest families have arguments. To minimize conflict, veterans suggest various strategies. But there are great rewards, too. "We've gotten to know one another as families rarely do," says Fran Gery. "It's going to be hard to break apart."

BY ANNE TERGESEN


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