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Multi Generational Households are on the Rise

The weekend birthday circuit. Need I say any more?

Once school starts, it’s only a matter of time before the invitations start coming home crumpled and wet at the bottom of their backpacks. 
Open House or Birthday Party???

There are a lot of tough choices for Angel and me when it comes to the weekend schedule. Who does the Open House and who takes the kids to the Birthday Party?  

Often we settle the matter with a good old-fashioned, reliable and very mature round of Ro-Sham-Bo.  (For the record, it’s always 2 out of 3 to win.)

As I’m enjoying the company of 3 other families at this last party, the conversation turns towards housing.  It’s a very common, and often heated, topic here in Santa Cruz.  Family A, B, & C all are 2-parent working households, with the average of 2.3 kids. All parents are gainfully employed.

The Families

Family A’s current situation is shared rental housing with a grandparent. Parents wouldn’t otherwise be able to afford to live in this house without grandma’s financial contribution. Likewise, grandma wouldn’t be able to afford any rental or housing situation on her own. Rents and housing prices have just skyrocketed!

Family B owns their home. They were able to buy a starter home back in 2009, pre-kids, at the bottom of the market, and with a generous 20% down payment gift from their parents.  Family B has outgrown their home and wants to up-size but can’t make the numbers work without a significant contribution from their extended family again.

Family C's income doesn't keep
up with their $3000/month
rent payment

Family C is in a rental. 3 bedrooms, 2 bathrooms, clean, safe neighborhood, nothing fancy.  Sometimes they struggle making the $3000 rent payment a month and have to ask for assistance from a set of parents to get them through the tougher months. 

The Question

I would be lying if I said these types of conversations or family circumstances were a first-time occurrence.  In fact, the housing affordability topic frequently comes up.  I hear about all kinds of living situations, family compounds, assistance, generous down payment gifts, properties being willed to grandkids.  I’ve heard it all. 

Through the course of these conversations, I usually offer some contribution to the discussion, pick a few brain’s, throw in a couple ideas, and then inevitably follow everyone else into the yard for cake and piñata.  There is no real concrete solution to offer.

What are people going to do to stay here in Santa Cruz?

The Numbers

755 14th Ave, Santa Cruz
Swan Lake Gardens
Measure J County Affordable Housing

If you look at the raw data, the median household income in Santa Cruz County is $67,000 (I’m rounding up.)  Based on that income, one might be able to qualify for a $300,000 loan.  That’s assuming great credit and no debt. Yet, the median value of owner-occupied housing is $557,500.  That’s a $250,000+ discrepancy.  Even if the family saved 25% of their income, it would take them 15+ years to save enough to bridge the gap between wages and housing values. 

Again, I come back to the same question. 

What are people going to do to stay here in Santa Cruz?


HOW are they going to do it?

So… How are they going to do it?

Upwards of 16% of the population are already living in multi-generational households.
One third of adult children expect to share a household at some point. Why? The 65+ population is expected to double.  Long term care costs continue to rise. Millennials are entering a shrinking workforce with increasing college debt. To name a few.

It's very common in other countries for grandparents to
live with their grown children and family.

Multi-Generational Households aren’t coming, they’ve already arrived.  

Listen at the next birthday party.  Ask about people’s current living set ups. Talk with me. I’ll tell you how homes with a "granny unit" are selling for a premium.  Duplexes are being snapped up before the first open house. Family compounds are IN! Buyers want to know where they can put in a guest unit or divide a large home into two separate living spaces. 

If you own a multi-unit property or family compound that you’ve outgrown, now is the time to consider selling. If you’re considering a multi-generational purchase, see me so we can come up with a serious strategy.  Housing costs are not going to go down. It’s time to talk about how to secure your future here in Santa Cruz. 

Aimee Thayer-Garcia is a Real Estate Broker Associate at Bailey Properties. She is Top-Producing Agent and practices Real Estate full time with her husband, Angel Garcia. Mom of 3.  831-435-9146.