(Bloomberg News) Kevin Barnes figures buying a newly built home saved him money. That's because he chose a model with a second master bedroom for his mother-in-law.
"She's a free babysitter," said the 42-year-old chemical salesman, who in June purchased a four-bedroom house in Orlando, Florida, built by KB Home. "Day care costs about $200 a week."
The Barnes residence is part of a growing line of new homes marketed to multigenerational families, a category that increased by 30 percent from 2000 to 2010, according to the U.S. Census Bureau. KB Home, Lennar Corp. and PulteGroup Inc. are among the builders that offer models with second master bedrooms, kitchenettes and separate entrances.
Those features may help lure buyers at a time when new homes are selling at a record slow pace and more Americans are living with extended families, said Megan McGrath, a homebuilding-industry analyst with MKM Partners LP.
"When builders are still fighting for every sale, hitting on something that resonates with your local demographic can make a difference," McGrath, based in Stamford, Connecticut, said in an e-mail.
The number of households comprising three generations rose to almost 5.1 million in 2010 from 3.9 million a decade earlier, according to the Census Bureau. An estimated 51 million Americans, or 16.7 percent of the population, lived in homes with at least two generations of adults in 2009, up from 42 million in 2000, the Pew Research Center said in an October report.
"This is a niche area that appears to be solid and growing," Stephen Melman, director of economic services at the Washington-based National Association of Home Builders, said in a telephone interview. "It's a demographic thing."
The increase in multigenerational families won't stimulate demand for new houses because it represents a slowing of household formation, Lawrence Yun, chief economist for the National Association of Realtors, said at a Nov. 11 conference in Anaheim, California. It's also not clear the trend will continue once the economy recovers, he said.
"The past few years is really about economic hardship," Yun said. "More people in multigenerational households just means there are more people under one roof."
Falling Household Formations
Household formations fell to about 515,000 in 2009 from as high as 1.48 million in 2004, according to the Census Bureau's American Community Survey. The number of formations in 2010 was about 981,000. The percentage of men aged 25 to 34 who live with their parents grew by almost a third during the past five years, as so-called boomerang children returned home from college or the military or lost their jobs, census figures show.
At the same time, aging baby boomers are moving in with their children to save money and share the task of child care.
"Clearly it's not all because of the bad economy," D'Vera Cohn, a senior writer with Pew, said in a telephone interview from Washington. "But it accelerated during the bad years."
Those "bad years" hammered new home sales, which are expected to fall to 305,000 this year, according to the National Association of Home Builders. Last year, 323,000 new single- family homes sold, down from a peak of 1.28 million in 2005 and the fewest since the Commerce Department began tracking data in 1963, as unemployment lingered around 9 percent and discounted prices for foreclosed homes made it tough for builders to compete.