How Empty Nesters Could Help Ease Housing Shortage
With 16 million new households expected to be formed in the U.S. in the next 10 years, the key to solving affordable housing issues might be…less household formation.
Sounds crazy, no? But Trulia, San Francisco, says in some markets, two generations–retiring Baby Boomers and up-and-coming Millennials-could work together to solve two dilemmas: how to keep Boomers in their homes by renting out rooms to boost their income; and Millennials renting a room to save money.
“It’s a tale of two generations,” wrote Cameron Simon, housing data analyst with Trulia in a paper, Boom-mates: How Empty Nesters Could Help Ease a Housing Shortage (https://www.trulia.com/blog/trends/boommates/). “In America’s most expensive housing markets millennials struggle to find affordable housing. Meanwhile, nine in 10 retirement-age baby boomers and older Americans want to stay in their homes even as costs rise.”
Simon said with prices high, inventory low and new housing growth stagnating, Boomers and Millennials could get together to solve their mutual housing-related problems. He said tens of thousands of homes and nearly 3.6 million unoccupied rooms that could be rented out–nearly all owned by older Americans.
“For retired or soon-to-retire boomers, extra rooms are an opportunity to supplement income and offset cost-of-living increases–as much as an additional $14,000 a year,” Simon said. “For many older Americans, renting a room provides an economic boost that may help them stay in a home longer. For young adults, renting a room as opposed to a one-bedroom apartment could save them up to $24,000 annually.”
The paper notes while the idea of older Americans sharing space with young adults–essentially renting out the grown kids’ rooms to strangers–may seem odd at first, it said such non-family, multi-generational housing solutions are growing across Europe. Here in the U.S. many universities now offer exchanges where older adults can rent extra space to budget-strapped students.
The paper ranked Washington, D.C., highest for the share of homes with spare rooms among the top 25 rental markets. “The demand for rentals in the nation’s capital is massive, yet its rental stock has largely stagnated recently,” Simon said. “A spare bedroom can easily bring in $942 a month.”
Simon noted metros in Virginia and around the Washington area are the biggest places to look for empty nests. Of the 100 largest metros, Silver Spring, Md., ranked second and Washington fourth (but ranked first when only considering the top 25 rental markets). Nearby Richmond, Va., ranked fifth and Virginia Beach, Va., eighth for share of homes with available rooms.
“Virginia’s large homes are a perfect place where younger home seekers with limited funds can find ample room,” Simon said.
Among the top 25 rental markets, Tampa, Fla., seems to have maximized its available home space. Just 2.1% of owner occupied homes have spare rooms that can be potentially rented out and demand for rental housing on Trulia in Tampa is high. Renting out a spare bedroom in Tampa would only have an estimated monthly income of $505, the third lowest among the top 25.
Salt Lake City leads the 100 biggest housing markets for available bedrooms. “With 7.7% of all owner occupied homes having multiple spare rooms, Salt Lake City’s rental market is Utah’s diamond in the rough,” the paper said.
Simon said the decision to rent a room is the hardest part, as multi-generational living has more than financial benefits.
“There are advantages to sharing a cross-generational household beyond the health benefits,” Simon said. “Socially, interacting with multiple generations can be extremely valuable. Older generations provide a source of wisdom and experience to younger generations, and in exchange the older generations are exposed to and taught about new technologies, ideas and perspectives.”
