The hot new real estate play: Move in with Mom

When Dan Ellington began house hunting in Chicago, he knew he needed a place with enough room for his wife, daughter, and his mom.

“My mother has MS, so this allows me to keep a close eye on her,” he explains. Meanwhile, “my daughter learns so much from being around her grandma every day.”

As a real estate agent, Ellington has noticed a surge in buyers shopping for multigenerational homes. “Demand is increasing due to affordability issues,” he explains. “We save on housing, food, and childcare, while regaining a sense of community. My great-aunts lived this way back when our family first came to Chicago, and I think it’s making a massive comeback.”

The numbers back it up: One in three US adults 18–34 currently live with their parents, and many stick around after they have their own kids. In the past decade, the number of households with at least three generations under one roof has grown from 3.2 million to 3.9 million. Although they make up just 4.5% of listings, homes with keywords like “in-law suite,” “granny flat,” or “guest house” attract 13.5% more views and carry a median price of $709,000—about 65% higher than typical listings, according to Realtor.com. Even after adjusting for size, multigenerational homes sell for $262 per square foot, compared with $215 per square foot for a standard house.

“Buyers are not deterred by the higher price tags,” explains economist Hannah Jones at Realtor.com. “The demand is strong, and supply is struggling to keep up.”

A multigenerational “mismatch”

Multigenerational homes are common in pricy areas like California: Los Angeles tops the list nationwide with 23.7% of listings, followed by San Diego (22.7%), San Jose (18.0%), San Francisco (17.4%), and Riverside (14.9%). Meanwhile, the affordable Midwest has the fewest, with Milwaukee, Detroit, and Cleveland at 1.5%, 2.0%, and 3.1%, respectively.

Still, whenever a multigenerational listing does pop up in Detroit, it attracts 82% more views and commands a 120% higher price. For Jones, this steep premium suggests “a real mismatch between what buyers are looking for and what is actually available.”

The investor angle: Find properties with basement apartments or ADUs—or add them. The demand is there, but supply isn’t, and profits will follow.

“I have bought several homes where I’ll add value by converting basements into mother-in-law suites,” says Colorado-based real estate investor Brett Johnson. In fact, “I will consider a project only if there’s a separate outdoor entrance or a clear opportunity to add one.” And even if Mom doesn’t move in, the space doubles as a rental property.

Although multigenerational homes make a lot of sense in a world where many can’t afford to live on their own, “it’s a lifestyle choice as much as a financial one,” points out Ellington. “For my family, the ability to support my mother while giving my daughter that connection to her heritage is worth every bit of the effort.”