Danville Realtors recently read an article about the housing market and the shift to having housemates. As we read this article, it got us talking about trends in real estate and where the market is headed:
The lack of affordable housing has driven us apart, but new ways of addressing the crisis may end up bringing us back together. California’s Senate Bill 9 is one of those measures, which aims to increase housing by creating more living spaces within existing properties. But people are also taking the law into their own hands, so to speak, to create denser households, squeeze more shelter out of the existing market, and enjoy the benefits of more social living.
Accelerated by the pandemic, multi-generational living (homes shared by three or more generations) has quadrupled over the past decade. Though it’s not a new idea, the fact that even affluent people in the U.S. are now interested in sharing their homes with extended family marks a major shift away from the norm. And there are many benefits; studies show that intergenerational living is beneficial for senior citizens who otherwise languish in nursing homes.
Co-living got off to an awkward start, as start-ups attempted to sell people on the idea of for-profit communal living. Those early efforts were often mocked as “adult dorms,” but the idea was planted, and now many co-living businesses are thriving. More importantly, planning commissions across the country have embraced the concept of co-living as a means of increasing housing density, and are changing regulations to legalize all kinds of previously frowned-upon house-sharing arrangements. It’s a real-world solution that happens to look a lot like The Real World.
The newest shared living situation to go mainstream may come directly out of SB-9. California homeowners who choose to add rental units to their properties will become landlords, though of a different sort. They’ll be sharing space with their tenants, who will also be their neighbors. In the years to come, that mixed relationship could become very common in California, where landlord-tenant relations have been adversarial for a very long time. Living together could make us all closer in more ways than one.
So, let’s weigh up on this. What we have seen in the market is that the housing supply is still low while demand remains high. However, there is growing concern about the rise in rents and a potential increase in mortgage costs due to increasing interest rates.
For example, the average cost to rent a 1-bedroom apartment in 2021 was $1205/month. In 2022 that has increased 64% to $1854/month.
Here are a few rent statistics for the state of California:
- 43% of households rent their homes
- 2.8 people live in the average renting household
- 30.5% of renters are under 3 5 years old
- 15.2% of renters are 65 or older
Nationwide, 41% of renters spend more than 35% of their income on rent. Some expect this income percentage to rise in 2022, which could increase the number of individuals who opt for housemates.
Let’s see if things have changed since this article was first published:
According to the Pew Research Center, The U.S. population of multigenerational households has more than quadrupled since 1971. Multigenerational living is popular among Asian and Hispanic immigrants and is expected to be a popular option for immigrants The financial benefits of living in multigenerational homes are increasing as well, with lower-income adults saying the living arrangement helps them financially. The trend of living in multigenerational homes is expected to continue as rents continue to rise.
Made popular by the tv show Golden Girls, co-living communities are increasing in popularity among those who simply don’t want to live alone. This is especially true among seniors, allowing them to share the financial burden of increased rents and other rising expenses. Senior living facilities are seeing stiff competition from co-living arrangements, with companies being created in 2022 to match older roommates together in apartments equipped to meet their needs.
Also known as SB 9, the California Housing Opportunity and More Efficiency (HOME) Act was created to help streamline a homeowner’s ability to create a duplex or subdivide an existing lot. Duplex living can be beneficial for the renter and owner alike: for example, converting a single-family home to a duplex can generate an additional income stream for owners, and provide privacy and an affordable place to live. The majority of tenant-neighbors’ agreements are among friends or family members., but anyone can benefit from this arrangement.
Danville Realtors Predictions
The 8.5% inflation rate in the U.S. is the highest in 40 years, with food, rent, energy, and other sectors seeing large price increases. The Federal Reserve is expected to raise short-term interest rates by half a percentage point on May 4. This is predicted to help ease inflation, but prices will remain high. Housing costs will most likely remain high as a result, prompting the continued demand for housemates. We will continue to monitor the situation with inflation and the effects it has on the housing market.
About Range Homes
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