It’s a tale of two generations. 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.
Prices are high, inventory is low, and new housing growth is stagnating. But what if these two generations got together to solve their mutual housing-related problems?
We looked at the 100 largest housing markets to find people living in homes with at least two bedrooms more than the number of occupants – to account for a guest room or office – owned by the oldest Americans. We found tens of thousands of homes have nearly 3.6 million unoccupied rooms that could be rented out.
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. 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.
While the idea of older Americans sharing space with young adults – renting out the grown kids’ rooms to strangers – may seem odd at first, consider that such non-family, multi-generational housing solutions are growing across Europe. And even here, many universities are now offering exchanges where older adults can rent extra space to budget-strapped students.
We found the benefits of multi-generational roommates – or boommates – vary by market based on inventory and market rental rates. We used the findings from Trulia’s room-for-rent report for the top 25 rental markets to give would-be landlords a better idea of the potential financial benefits. Some of our findings:
- Washington ranks highest for the share of homes with spare rooms among the 25 largest rental markets. The demand for rentals in the nation’s capital is massive, yet its rental stock has largely stagnated recently. A spare bedroom can easily bring in $941 a month, the seventh-highest rental income we’ve projected.
- 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.
Washington Offers the Biggest Opportunity for Multi-Generational Shared Housing
Metros in Virginia and around the Washington area are the biggest places to look for empty nests. Out 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.
We found that Boston, Cambridge, Mass., New York, Oakland, Calif., and San Francisco would be the top five most profitable metros if you wanted to rent out a room, with San Francisco coming out on top with an annual income of around $22,000. Renting out a spare bedroom in San Francisco can bring in more than $1,800 a month in supplemental income.
In the top 25 rental markets, boomer homes have an average of 4.2 bedrooms, and only 2.6 household members. Discounting one bedroom for a guest room or office, there’s an average 0.6 extra bedroom per household that could be potentially rented out.
When we broadened our search to the biggest 100 rental metros for available rooms, we consistently found Florida ranking at the bottom for available bedrooms. In fact, Florida metro areas comprise four of the bottom five, and seven of the bottom 10 metro areas for available rooms out of the biggest 100. One potential reason there’s not extra room in these markets: retirees may be downsizing to homes that more adequately fit their needs.
Multi-Generational Living Has More Than Financial Benefits
Non-blood related multi-generational households aren’t trending much in the U.S., but they’ve seen growing popularity in Europe. In addition to the financial benefits to both the younger and older generations, these relationships have been shown to have significant social and health benefits. The increased social interaction has been observed to fight dementia and regulate blood pressure. Additionally, loneliness and social isolation has been attributed to an increased mortality risk, which shared housing would also mitigate.
Do you really want to open up your home to a stranger, and a millennial at that? There are advantages to sharing a cross-generational household beyond the health benefits. 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.
Methodology
Trulia gathered data on household inhabitants and bedrooms from the US Census* for the 100 largest metro areas. We filtered for household heads over the age of 53 (1964 is last year of the baby boom generation), owner occupied residences, and non-multigenerational households. From there, we calculated the number of available bedrooms as the (total number of bedrooms) – (the number of household members) – 1. We subtract 1 additional bedroom to account for various uses, such as an office space or use as a spare bedroom. We compared the resulting count of homes with spare bedrooms to the total number of owner-occupied households within the metro to come up with our metric for share of homes with unoccupied bedrooms. Our rent estimates were based on a previous anlysis in Trulia’s February 2017 Room for Rent report. We estimated the rent using the rental cost of a single bedroom in a 3-bedroom household, as the houses we are looking at have a minimum of 3 bedrooms, and single bedroom costs tend to normalize at 3 bedrooms or more. Trulia uses the Census defined metropolitan divisions where available; otherwise, we follow the metropolitan statistical area definitions.
