Multi-Generational Homes in Huntsville: Four Ways to Do It, and What to Verify First

All right, welcome back to Boomtown Podcast. I'm your host, Cameron Walker, the broker and owner of Cameron Walker Realty. With me today as always, Megan Hines, our agent extraordinaire. Hello.

And today we're going to talk about multi-generational housing, how it impacts how people move here, what families do, pricing, designs of homes, and some of the regulations depending on what you want to do to accomplish that goal. So, Megan, this is something you and I have talked about a lot recently, you know, particularly with several of the clients we've been servicing. So it was really what kind of brought up this topic, the clients that we're working with. So I know you have some people that are going through this right now.

Well, I think that it's become a concern. People in the last, say, five to 10 years have seen college students coming back home or people having to move in with family in order to afford a house eventually. And then you also see parents needing this as well. So in the United States, it was always: you grow up and then you go away, and that is how you establish your independence, and that is how people live.

They live, you know, your kids might live in another state than you, and we are seeing more and more families coming back together, and this is from economic pressure, really. But it's not all bad. I don't want to never see my kids again.

Yeah. And I know I always joke, you know, tell my kids when they grow up, wherever they move, I'm going to live next door. Right. And that's exactly what we're talking about.

It used to be like you had failed if you didn't move far away from your parents. Yeah. And I think there's an expectation change, and I'm not going to get into all of it. HGTV and social media make everybody look like a millionaire, when in reality, when you first get out of college, you live in a dive apartment where it's you, the roaches, and somebody else's loud music and footsteps.

And it's hard to be, and that's a time-honored tradition that's gone away. Right. The expectation is I can get out of college, make 70k, and go buy a house. And that's just not the reality for many people now.

And so you do see people coming home, living with their parents. And then we also see this aging population, right? That maybe they're across the country because people are much more mobile now, right? Like they'll move across the country for a job, for education, or some other purpose, or maybe they work remote and they can live anywhere they want.

So they move for the climate, and then you know they're 2,000 miles away from mom and dad as mom and dad age, right? So as they get older, they want to bring them closer, or maybe mom and dad want to move closer because they want to be closer to the grandkids, you know, whatever the reason. You start having to bring them in too. So you wind up being this, what do they call it?, the Oreo generation, where you're the cream in the middle and you have the kids and the grandparents and you're kind of, at least to some degree, either financially or just in other ways, responsible for everybody.

Yeah. And we're seeing a lot of that, and it's changing the way that houses are built and what's popular. If you look at, you know, a popular movie from 20 years ago and you see a neighborhood with fancy houses, they all have like big steps and they're all on hills and they're all two stories. Today's luxury houses are ranch houses.

Yep. For the most part. I mean, we still do see some two-story homes, but the ranch house is taking over. And this has to do with multi-generational living for sure.

You need a ground floor master. And the ranch is the most convenient. And it's also the most spread out. So you can have your kids at the other end of the house from you if you have a large house.

And that works really well for adult children. Yeah, I would say multi-generational housing needs have definitely changed how houses are built in Huntsville. You see, like to your point, single level where things are a little more spread out. You may have a mother-in-law suite at one end, you know, with an en suite bathroom, a larger walk-in closet, a larger bedroom.

You'll see two-story homes where you have multiple living spaces. This is something I'm constantly asked about. As a matter of fact, I have a listing that just went under contract last month and that's what they were looking for when they moved here. They wanted a space for the adults and for the kids.

Yeah. And so having these two different living spaces was huge for them. And then the other thing you'll see is like mother-in-law cottages or, you know, some kind of outbuilding that's almost like an apartment, ADU if you're coming here from other parts of the country. It's an accessory dwelling unit.

So, you know, depending on what you want to call it, that's what it is. It's where another member of the family lives out in their own little apartment that's effectively attached to your home.

Yeah. And we see so much of that, and what you don't see a lot of are new builds that are like two bedrooms. You don't see those; people call and they'll be like, "Oh, I think maybe a two-bedroom," and you don't see that, and that is because the housing market is being influenced by this need.

Yeah. No, I know a builder that was begging me to find somebody for a two-bedroom. They had bought another builder and that was a legacy floor plan that had been built, and they're like, "We would never do this." And I was like, "I'm not going to sabotage anybody into putting them into this."

And I get it. Like, when I lived in Northern Virginia, that was absolutely common, right? One-bedroom, two-bedroom, things like that. You have lots of independent people moving away from their families and living.

And now you have a lot of people coming back together. And you're seeing the average size of homes is bigger. It's changing the way houses are built in this area.

With bigger comes more costs, though, right? And that's the other thing. We already see an inflation in prices over time, right? So, and then we had the rapid inflation of the early 2020s.

So, there's already an increase in price there. Now, if you want to build bigger or more features, right? Adding another large bedroom, adding another bathroom, those do add cost. Making a bigger footprint for a house adds cost.

Adding another garage bay adds cost, right? And so then you have to start looking at how do you finance this? You know, can that Oreo generation, the cream in the middle, can they afford it all on their own?

Yeah. And it's tricky. And sometimes you have financing schemes that involve more than one person. There are different, like, lenders are doing some tricky business these days.

Well, there's always been like the co-signer, right? Like, and a lot of times that was like when somebody bought their house when they were in their early 20s and they needed a co-signer or a gift from their parents. And we still see a lot of that. If you're under 45, the, I forget the exact number, but the studies are out there and it's sky-high, the amount of people whose down payment came as a gift from family.

It is staggering how high that number is. And that's how they're competing against other people who have already been in the housing market and they're carrying equity over from one house to another, pulling from a retirement fund that's already, you know, vested. So that's how they're getting around that. But when you look at some of these loans, I mean, I'm seeing applications where the loan officers happen to get a second application because only four people go on the first one.

Yeah. And I'm seeing other schemes like you said, where people are buying houses in trust, so that the tax benefits, especially if somebody were to become deceased, there's a whole different implication around those.

Yeah. The other thing that we're seeing is people wanting to build sort of a compound here. There's the urban environment where people are building larger houses with multiple living areas, and then there is the more rural environment where people are buying land and building compounds or, you know, one house and then a few tiny homes. There's different ways to manage this.

If you want to do something like that, you really need to be out in the county because you're going to be doing something that is kind of tricky business to build these multiple houses and there are a lot more restrictions if you're in an urban area. Yeah. And that can get pretty complicated quickly. So, I had some clients, we had how many acres?

66 acres of raw land. Oh, wow. And they had originally had hundreds of acres and they had developed part of it into a neighborhood over the years and then they kept a good chunk for themselves. And we eventually did sell it to a developer.

If you've watched some of our previous episodes, Landon, one of our favorite builders out there, his business partner wound up buying it. But in talking with those sellers, we kept getting people that were interested in that family compound out there. Yeah. And because they had developed and subdivided land before, they knew a lot more about it than most people.

And so there are rules about, like, bringing in sidewalks, how wide the roads have to be. They don't, the counties don't want landlocked lots anymore. So you have to get an easement nowadays. And that easement, it's got to be a 30-foot wide road and it can't be gravel or dirt anymore in some cases.

And there are exceptions to every one of these rules. There's family exceptions. So it used to be you could hand land down to a family member, sell it to them for a dollar, gift it to them, whatever, but you would subdivide it to give it to them and then because it was a family member, they weren't subject to any of these rules. They could immediately sell it to a developer.

Well, the state got wise to that, passed a law that now you have to hold that land for 2 years before you can sell it again or you're still subject to all those restrictions and requirements. But then you have to have a certain amount of utility going to the area, right? Like, yeah, there, you know, not only do you need water, you need enough water, right, for whatever you're building out there. So there's a lot of restrictions in place now that didn't used to be there.

And then there's exceptions to those and there's exceptions to the exceptions.

Yeah. So you really have to do your homework if this is your plan. You can't just assume that you're going to be able to build exactly what you want on the land because you own it. Yeah.

And just know going in, right? Like pre-plan that. Have it before you ever buy the land. You need to know what you can and can't do.

We can always, we've got some great resources. We'll put a link down in the description. We'll put a QR code on the screen. Just point your phone at it, click the link that pops up, and it'll take you right to the website and we'll put some of those resources for people that are looking to buy compounds or what have you, so they understand a little more about what they're getting into.

Good news is land's still relatively cheaper compared to other areas. So it is still something to be accomplished, right? We're not discouraging you from doing it because you can absolutely still do it, but you need to know what you're getting into when you do it. Second part of that I'm going to say is financing.

So when I was working with those clients listing their property, we kept getting people interested in a 45-acre chunk of it, which was great. They all wanted to buy it on VA and VA doesn't allow you to buy that much land on a loan. They will allow you to buy land as long as you're about to immediately build upon it. And the amount of land it can be is a bit of a gray area, but we're way out of the gray area at 45 acres.

Yeah. So that is tricky. I think that if you're planning to do this, you have to be aware that what you're building is very specific and it's not going to be just a quick, it probably won't be easy to sell. It might be, but if you want to go into a rural area and build a specific compound that's designed for you and your family with all your specific needs, that's going to be something that is very bespoke to you and it might not speak to a buyer.

Yeah, absolutely. And if resale is a consideration down the road, then you need to take that into account in your design. Yeah. So you can't just assume that this awesome thing that you love is going to be loved by all.

Yeah. Absolutely. You need to have some conformity to the market or the ability to retrofit with reasonable cost. All right.

So we have houses with, like, a mother-in-law suite or potentially even two masters on the main level. Seeing more and more builders offer that, but again, at a higher cost. We're seeing people retrofit their homes for that. And yeah, something we don't talk about enough are homes on crawl spaces.

And that's a way, if you thought that three years down the road, five years down the road, somebody might move into your house, be it a kid moving back, a parent moving in, that you can retrofit a house much easier that way than you can on a slab because you can move the utilities underneath. Then, you know, of course, bigger homes, right? Two-story homes where you have multi-level living so that you have living spaces for everybody, not just bedrooms. And then, you know, mother-in-law suites, cottages, what have you.

And then, of course, the compound. So you've kind of got three big options. I would say four if you want to talk about the difference between a single level and a multi-story home.

Yeah. And I think that you also, if you're planning to do this, you need to talk about things that we've talked about in other podcasts, like maybe proximity to healthcare isn't important to you, but it will be to your aging parent if they move in. So you kind of have to be playing three-dimensional chess when you move here. Be like, are my parents?

Like, there's a lot that can happen. There are a lot of unknowns and things are changing really quickly. Yeah. Let's say you're a perfectly healthy family, right?

No extreme medical conditions. But if you're three generations deep or I had neighbors, somebody's going to be, I had neighbors that just moved out. They were four generations. They had a baby while they lived there, two babies actually.

They had young adults, the people our age, and then grandparents all living in one home. And it's like, okay, that baby needs a pediatrician. The middle generations, they need to see family doctors. And then the older generation, they're going to have other care needs, right?

And so you need to be in an area where you have access to all three. I'm going to need a therapist if I live in the house. Absolutely. So, we'll add a fourth.

For sure, but that does bring up mental health and eye doctors and everything else, right? So, these are things you have to factor in. And then there's outdoor activities or extracurriculars, right? What's your third space?

Do you go to the park? Do you like to walk? Do you like to hike? You know, I have people that move here and they tell me they like to hike and then I find out they need a paved flat path.

I don't call that hiking, but that's okay. So, I don't get to define all words, but that's why we ask clarifying questions, right? But what if across those generations, you need to push a stroller on flat ground, somebody else needs to walk on flat ground, but you want to mountain bike, right? That also impacts where you want to live.

Yeah. But we have a lot of paved paths here, though. We do. And we have a lot of places to mountain bike.

So, yeah, we got these greenways, man. Yeah. Absolutely. Something for everybody.

There's a lot of paved hiking. Absolutely. So, but you know, the your third spaces do impact it. You know, work, school, if you're religious, where your church is, your off-hours activities, sporting events, whatever it may be.

And you've got to take everybody's needs into account. And then you have the house, right? So, it's something you if you're going to do it, you have to get in touch with us sooner rather than later so that we can plan this out. And probably the number one thing I see people doing in this is building on their own, like, be it with a custom builder or even a production builder that has the right floor plans.

Yeah. And so I think that's probably the way to go for most people. It's affordable. It's economical.

It's baked in where you don't have to make too many crazy decisions. You don't have to go out and become like an attorney on the laws of subdivision, etc. Yeah. I think people come into this thinking that they're going to build a house and they're going to do everything.

And that's really complicated. And these builders, they're used to doing this and they're dealing with lots of people who are in a similar situation to you. So they have already been there and they can help you. And their floor plans, they're adding more and more of these style of floor plans.

Like three years ago, you called and wanted a three-car garage, we were talking custom, million-dollar home or an older home. Yeah. Now, like there's $330,000 homes with three-car garages, right? There's $330,000 homes with four bedrooms and that fourth bedroom has a complete on suite, right?

And those have three-car garage. Yeah. So, like now, you really are prepared to take on the next person, whether it's a teenage child moving into adulthood, a kid coming back from college, a parent moving in with you, whatever it may be. Like you're prepared for that and you don't have this monstrosity of a house that's really weird.

Yeah. You're even seeing like more multi-baths and smaller houses, less of a huge open space. We're still seeing a lot of open floor plans, but there are more spaces. And I do think that that has to do with changing demographics in multi-family living.

Something people have to consider when they do this, too. I worked in the 55 and older community when I was in Virginia and people had a really hard time downsizing from the 4,000 sq. ft. home to the 1,800 sq.

ft. home. Now, imagine you're doing that but with two other generations of your family, right? You're effectively moving your bedroom suite.

If you're lucky, you get all of that. Right. So, but that is something you have to prepare for. The folks living across the street from me, very good friends.

They moved in a couple years ago. Her parents just moved to town so they could be closer to the grandchildren and all that. And half of their old house is wrapped up in cellophane in their garage with no place to go inside. They just did not prepare for that.

And my buddy that lives across the street was really complaining about it because he was like, "I kept telling him to move all, you know, sell this furniture off, sell it off." He's like, "We wound up having to move it all in the garage and now they can't park there." Yeah. Now you see that; that's why the thrift stores around here are great.

Absolutely right. Absolutely. So, but you know, one last thing I want to talk on on this is financial preparedness. You know, if you are going to use money from your parents to buy a home or retrofit one or build the compound or something like that and they're aging and they may wind up needing long-term care, Medicaid has a 5-year look-back period to see if they handed money off to somebody else to kind of protect their assets.

And you really need to talk with somebody, particularly like a trust attorney or somebody like that, that can help you navigate that so that two, three, four years down the road, you don't hit a landmine you weren't prepared for. And while we can help you out in all sorts of ways, particularly with putting you in touch with the right people, we're not the right people to have that conversation because that's such a specific financial, there's so many different tax considerations, too. But we know the people that can help you. Yeah.

And you really do because if you are living with your spouse, they automatically get your house. But extended family members, that's more complicated. And you need to make sure that if these people are living with you and they're your family, you don't want to leave them out in the cold. Right?

What happens if you're the homeowner and you have the kids and the parents there and you pass? Who gets what? What are you going to do there? For sure.

So, yeah. So, I think we kind of ran the gamut there. Like, we'd be happy to help you if this is a situation you find yourself in. And it doesn't happen all at once.

Sometimes people trickle in. So, we'd be glad to help you regardless. A lot of changing needs. Yep.

All right. Thanks for watching. Thanks.