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The rise of multi-generational households

Feb 10 2016 09:35
Glenda Williams

Embracing the culture of multi-generational living is not for everyone, but many wouldn’t have it any other way.

Think Greek or Italian cultures where parents, children and grandparents residing under one roof are common household set-ups.

This way of life may not be new for some population groups and cultures such as these, but multi-generational living is also finding favour among groups where this type of living arrangement has generally not been common practice.

Yet the spike in the trend is not always a lifestyle choice. Increasingly, the reasons are economic with caregiving and care-sharing also high on the list.

Globally, multi-generational households are on the rise. In the US, these households exceed 18% having doubled since the 80s according to the Pew Research Center.

And the 2015 National Association of Realtors (NAR) Home Buyer and Seller Generational Trends Report reveals that 13% of all home purchases in the US in 2014 were by a multi-generational household, incorporating adult siblings, adult children, parents and/or grandparents.

The key motivators for a multi-generational property purchase were cost savings (24%) and adult children moving back into the house (23%), according to the report.

Across the pond in the UK, the number of adult children between the ages of 20 and 34 who are living with their parents has increased by 25% over the last decade according to the UK’s Office for National Statistics (ONS). 

Back home in South Africa, multi-generational living is a lofty 32.2% for three or more generations living together according to Stats SA. With 37.2% of this group unemployed and only 19.2% employed, there is no disputing economic pressure as a driver of multiple generation living. 

Cultural practice aside, economic necessity has meant that historically the concept of extended family living has been common among SA’s black population.

In 2014, 35.5% of the country’s black population lived in extended family households, a figure that has declined slightly from 36.2% in 2004.

The reverse is true for the country’s white population where extended family living has doubled from 3.69% to 7.9% in the last decade.

“With the associated benefits of pooled resources and cost efficiencies, multi-generational or extended family living is making increasing economic sense in today’s world, including South Africa,” Dr Andrew Golding, CEO of the Pam Golding Property Group, tells finweek.

“This is becoming evident across regions and in various sectors of the market. Economic pressures are seeing adult children moving back home as singles or young married couples who occupy a cottage or second dwelling on the parents’ property. Rising costs and a shortage of affordable retirement accommodation, together with a concern for the care of aging parents is also contributing to the trend towards multi-generational living. As a result, some households accommodate up to three ?family generations.”

Old Mutual’s Savings & Investment Monitor report (July 2015), reveals that SA’s ‘sandwich generation’ – people supporting both their children and their parents – is growing and estimates that 25% of all working metropolitan South Africans now fall into this category – the highest percentage since the Monitor’s launch in 2009. And, according to the report, 47% of the Z-Generation (18-35 years) live at home with their parents.

What drives the practice of multi-generational living?

Beyond cultural custom, there are a number of drivers influencing the rise in extended family living, with cost-sharing, caregiving and care-sharing, high among these. 

Cost-sharing: Mounting household costs and stagnating or reducing incomes make the sharing of costs for one home that accommodates multiple family generations ever more practical and economically viable.

Care-giving and care-sharing: Aside from cost-sharing, multi-generational living provides built-in support structures for all parties.

The need for care for both grandchildren and grandparents can be seamlessly accommodated. Older or ailing parents can be cared for by their adult children, while on-site grandparents can care for their grandchildren.

Few families today can afford a stay-at-home parent and many are finding it difficult to cover the costs of childcare. 

According to the 2011 census, 7.7% of SA’s population is aged over 60. This is the highest proportion in sub-Saharan Africa. The increasing cost of retirement and scarcity of old age facilities is contributing to the trend of aged parents being accommodated and cared for by adult children.

Security: For the elderly who may be more vulnerable to crime, living with family members provides the security they might otherwise not have. And, says Ian Olivier, Pam Golding Properties area principal in Port Elizabeth, properties have a permanent people-presence rather than being locked up for the day and therefore vulnerable to crime.

Unemployment and affordability reasons are also chipping away at the number of young adults able to live independently of their parents. Take the rise in the so-called “boomerang” households – those with adult children who, because of these factors, have returned to the family home. 

While multi-generational living can be economically challenging for the ‘sandwich generation’, there are multiple benefits to extended family living arrangements.

But choosing to reside with other adult members does have its downsides. Among these are lack of privacy, intergenerational discord, conflict over individual space, disagreements over finances, and differences in expectations around responsibilities or care-sharing.

Given the personal dynamics that need to be factored into the equation, it’s not a one-size-fits-all type of arrangement. And some, like families affected by unemployment or the inability to get a home loan, may even be temporary in nature.

“Buying a home is an expensive exercise and related costs, especially the deposit, often make it difficult for first-time home buyers to access the property market”, says Carel Grönum, managing executive at Absa Home Loans.

Take Jabu Khumalo, who moved back to his parents’ home to save money to buy a one-bedroom flat. Not only were his parents willing to provide financial assistance to help him become independent, but the family also took advantage of Absa’s Family Springboard home loan, an offering that enables buyers with the help of family members or friends to qualify for a home loan. For this household, multi-generational living was a short-term solution.

Properties likely to attract multi-generational households

The reason for multi-generational living is frequently financial, and the pooled resources of two adult generations make buying a property more affordable by reducing the cost of home ownership. 

Historically, it appears that it is easier to accommodate multi-generations in freestanding homes, many of which have existing garden cottages that facilitate this type of living. “There is an increasing demand for properties able to accommodate two families, says Olivier.

“Typically a young family wants a house with a spacious cottage for parents. Most in demand are properties with a main family-size house and a reasonably spacious self-contained flat, preferably with its own entrance. Properties with flexible floor plans are also increasingly sought-after so if a property has the potential to accommodate two families through cost-effective reallocation of space, it will attract multi-generational buyers.”

The thread is similar in the Western Cape where properties with plots large enough to accommodate a “granny flat”; older houses with staff quarters for teenage and young adult children; residential homes with bathrooms all en-suite, typify requirements.

And in KwaZulu-Natal, the province with the highest number of multi-generational households at a whopping 41.5% many families are opting to build garden cottages on their properties for their parents, says Carol Reynolds, Pam Golding’s area principal for Durban Coastal.

Ground rules

Given a contracting economy and affordability constraints, the trend of multi-generational living is unlikely to wane. But be it short term or long term, for multiple generations of family choosing to live together under one roof, cohabiting discussions are essential before embarking on this type of living arrangement.

“Lay down ground rules and do a formal upfront agreement around privacy and splitting of expenses and tasks/chores/responsibilities,” advises Olivier.

“Check title deeds before buying a property with a granny flat or cottage or before building one. While local authorities may have given permission, this may not be allowed in the title deeds,” he adds.

Today’s generations are beset by a variety of challenges and multi-generational living could be the solution for some of the more pressing of these.

And while the multi-generational living trend may be resisted by those who may not wish to upset family dynamics or modern, emancipated children and independent, healthy senior citizens, factors such as unemployment, affordability and care needs are all likely to impact communities across the board and drive the trend higher.

This article originally appeared in the 4 February 2016 edition of finweek. Buy and download the magazine here

family finance  |  personal finance  |  life
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