Come Together: Multi-Generational Homes and Other New Living Arrangements

Source: Deutsche Bank analysis of Census Bureau Data

The Signal: In a much-discussed article last month, David Brooks laid out his thesis as to why "The Nuclear Family Was A Mistake." One of his key points concerns the rise of multi-generational homes:

"In 1980, only 12% of Americans lived in multigenerational households. But the financial crisis of 2008 prompted a sharp rise in multigenerational homes. Today 20% of Americans -- 64m people, an all-time high -- live in multigenerational homes."

The data we cite in the chart takes another -- but related -- view, looking at the number of adults aged 18-34 who live in their parent’s home. The 2008-09 financial crisis was a major driver for this trend, and with the prospect of another prolonged economic slump on the horizon, these types of living arrangements may increasingly be the norm through the 2020s.

The Opportunity: The rise of multi-generation living arrangements has piqued the interest of builders looking to put what the Lennar construction firm refers to as "two homes under one roof," which include special suites for in-laws and millennials.

Capitalizing on this trend can come in a few forms:

1. Create multi-generational floor plans.
2. Build multi-generational homes in high-potential areas (locations for existing Lenna properties include Washington, Northern California, Southern California, Utah, Colorado, Texas, Florida, and Minnesota).
3. Renovate existing homes.
   1. A recent example of a renovation-as-a-service (RaaS) is Made Renovation, which raised a $9m seed round for tech-enabled bathroom remodels.

Brooks’ article also notes another notable living trend: "The past several years have seen the rise of new living arrangements that bring non-biological kin into family or family-like relationships."

Examples of companies driving this trend include:

• Co-Abode (Helping Single Mothers Combine Resources): Founded on the principle that 2 single moms raising children together can achieve more than one going it alone, Co-Abode matches single mothers and helps them combine resources to get into better school districts, lighten the load of parenting and childcare, and enhance their economic opportunities.
  • This opportunity here is to build similar matching platforms.
    
• Common (On-demand co-living arrangements in major cities): Common rents co-living spaces in NYC, LA, SF, Chicago, DC, and Seattle. At an average cost of $1.3k/month for a studio (including utilities and internet), Common estimates that its properties cost less than half of comparable spaces found on Craigslist (~$2.2k/month) or traditional brokered rentals (~$3k/month).
  
• Kin (City living for the modern family): Launched in partnership with Common (see above) and Tishman Speyer, Kin provides co-living spaces for families that come with family-oriented amenities such as childcare, washer/dryer services, dog parks, play spaces, fitness studios, and community events.
  • Currently only available in NY, which suggests there are opportunities to port the model over to other cities.