This article originally appeared in the February 2025 edition of MortgagePoint magazine, online now.
Amid the whirlwind of economic forces impacting the housing market, one trend stands out. Multigenerational housing, once a rarity, is now becoming commonplace and reshaping not just how we live, but also how we lend and borrow.
There are dozens of scenarios that could cause families to choose multigenerational housing. Imagine a young couple, burdened by student loan debt, and discouraged by the competitive housing market. New parents struggling with the high cost of childcare could decide to live with relatives to make ends meet. Even middle-aged couples often welcome their aging parents into their homes and must renovate their space to accommodate their changing needs. These are the realities of multigenerational homes, a trend driven by economic pressures, demographic shifts, and evolving social norms.
For mortgage professionals, this presents a chance to think beyond traditional lending practices and become true financial partners for these families. But capturing those opportunities starts with understanding the unique needs and motivations of borrowers at unique life stages.
Events Shaping the Multigenerational Housing Boom
The rise of multigenerational households is not a standalone shift … it is fueled by a confluence of factors, each playing out in the lives of everyday Americans. Here are three common scenarios—along with strategies that can help lenders, and their originators anticipate and deliver on unique needs.
1. The Boomerang Generation: Graduates Navigating a New Financial Reality
Remember the excitement of graduating college and the anticipation of launching into independent adulthood? For many young people today, that dream is colliding with the harsh realities of a challenging economic landscape.
Skyrocketing housing costs, often coupled with the weight of student loan debt, are forcing a growing number of graduates to move back in with their parents—a phenomenon often dubbed the “Boomerang Generation.” But this seemingly temporary arrangement can be a steppingstone to long-term financial stability and eventual homeownership.
Here’s how lenders can seize this opportunity to engage the Boomerang Generation and build lasting relationships:
- Educate them on homebuying readiness: Young adults are eager for financial guidance and often lack the knowledge and confidence to prepare for their first home loan. This includes budgeting for a home, understanding and improving their credit rating, saving for a down payment, and managing their debt-to-income (DTI) ratio. Lenders can step in as mentors, offering personalized advice and resources to help them build the solid financial foundation needed to purchase a home.
- Show them the path to conquering student loan debt: Student loan debt can feel insurmountable for aspiring homeowners. Lenders can provide invaluable support by helping graduates develop a plan to save for a down payment, while paying down their student loan debt.
- Be willing to go above and beyond for first-time homebuyers: When the time comes for these graduates to enter the housing market, originators can become their trusted advisor. This means providing expert guidance on first-time homebuyer programs, navigating the mortgage process, and exploring a multitude of financing options that align with their goals. By establishing a strong relationship early on, lenders can become a go-to resource for these future homebuyers.
2. The Sandwich Generation: New Parents Juggling Family and Finances
The arrival of a new baby brings joy, excitement, and a whole new set of financial challenges. For many new parents, the cost of childcare can strain budgets, making it difficult to afford a home that meets their growing family’s needs. This often leads them to seek support from relatives, creating multigenerational households with unique financial considerations.
Mortgage professionals can play a vital role in helping these families navigate this transition and achieve their homeownership goals by:
- Thinking outside the traditional mortgage box: Families with diverse needs may require creative financing solutions. A broker could be the best option to help them identify the right lender or loan for their needs. At the same time, originators can educate them on a range of products, including home equity loans for renovations, construction loans for building additions, or even multi-family financing to accommodate extended family members.
- Helping customers find a budget to support their growing family: New parents often face unexpected expenses alongside evolving housing priorities. Lenders can provide refinancing guidance for borrowers to get into a better financial situation or plan for a move into a larger home as their family grows.
- Planting the seeds for long-term financial wellness: Beyond immediate needs, lenders can help new parents establish a foundation for long-term financial security. This could involve advice on financing strategies that accommodate future home upgrades, leveraging home equity for major life expenses, or integrating mortgage planning into broader retirement and investment strategies.
3. Caring for Aging Parents: A New Chapter in Family Life
As the population ages, more families are choosing to care for their elderly parents at home. This brings a new set of challenges, from financial considerations to the need for home modifications, to accommodate aging in place.
Here’s how lenders can be invaluable partners for families navigating this complex transition:
- Share your specialized lending expertise: Like the Sandwich Generation, families caring for aging family members may require specialized loan products to finance home renovations or access home equity. Lenders can provide expert guidance on options like renovation loans, home equity solutions, and reverse mortgages.
- Connect customers with a network of support: The challenges of elder care extend beyond finances. Lenders can demonstrate their commitment to holistic support by referring families to other professionals, such as financial advisors or wealth management consultants.
- Acknowledge the emotional landscape: Caring for aging parents can be emotionally taxing. Lenders who acknowledge this reality and offer empathetic support, alongside financial guidance, will build stronger relationships and earn the trust of these families.
Becoming a Trusted Advisor: A New Era of Customer Engagement
These three scenarios illustrate the diverse needs and opportunities within the multigenerational housing trend. For loan officers and originators, it becomes a call to adapt strategies and embrace a more holistic approach to customer engagement. By understanding the motivations and financial complexities behind multigenerational living, lenders can:
- Build deeper relationships: Position themselves as trusted advisors who understand a family’s unique needs and provide personalized guidance.
- Offer tailored solutions: Present a range of options and educational resources that address specific circumstances.
- Communicate effectively: Deliver the right information at the right time, using clear and empathetic communication strategies.
- Stay ahead of the curve: Continuously educate themselves on the latest market trends, financial products, and customer engagement strategies.
By embracing these principles, lenders can thrive in the evolving mortgage landscape and solidify their role as essential partners in helping families achieve better financial outcomes.
