Smart Moves

Downsizing With Kids Attached

After the Great Recession of 2008, many millennials moved back home. Since then, unemployment has plummeted and many more of these “boomerang kids” have jobs. Yet a surprising proportion of them still reside with their folks.

“The extended family is here to stay -- at least for the time being,” says Ashley Richardson, a veteran real estate agent in Maryland.

Richardson tells the true story of a couple of clients with a daughter in her mid-20s -- a barista -- who still lives with them. The parents sought to move from their large, demanding property to a much smaller colonial with a first-floor master suite and a tiny yard.

But the daughter put up a lot of resistance until her parents found a house where she’d also have her own master suite.

Richardson offers a few words of wisdom to downsizers in similar situations.

“Remember, you’ll probably be living in the new place a lot longer than your son or daughter. So always think of your own housing needs first,” she says.

Frank Furstenberg Jr., a sociology professor emeritus at the University of Pennsylvania, sees the big picture on family demographic trends. He notes that many young adults are still saddled with student debt, which slows their transition to independent living. But he contends most parents needn't fear that their offspring will need housing help indefinitely.

“People in the U.S. are marrying later, so the passage to adulthood is longer. But by age 25 to 29, there’s a huge drop-off in the number of young adults still living at home,” Furstenberg says.

Here are a few pointers for downsizers who reside with adult children:

-- Honor your retirement plans.

For people contemplating retirement on a limited income, the idea of keeping a large family home to accommodate grown offspring compels them to dip into savings or stay in the workforce longer than they’d like. Keeping the large family home can also mean continuing to shoulder tiring home maintenance demands.

John Rygiol, a California real estate broker who specializes in helping buyers, says he’s seen too many clients who’ve sacrificed their retirement security to maintain quarters for grown children.

“These kids are eating their parents’ lunch. Mom and Dad shouldn’t have to sacrifice their retirement plans for the kids,” he says.

Of course, many young adults living in the family home are unaware of their parents’ financial situation. Nor do they grasp the full cost of owning and maintaining a large house. That’s why Rygiol suggests that an important first step toward your housing transition could involve a family meeting to go over these realities.

“Sit down at the kitchen table and explain the whole situation to your kids. Outline all your expenses for the big house and why you need to move to economize,” he says.

Obviously, many young adults are well intentioned, and once they realize how important it is for their parents to downsize and cut costs, they’re more motivated to find their own housing solutions, according to Rygiol, who’s affiliated with the National Association of Exclusive Buyer Agents (naeba.org).

-- Don’t rule out a temporary rent subsidy for your offspring.

Given high rental rates in many metro areas, it can be a jarring transition for young people expelled from their parents’ residence without sufficient funds to cover their own housing costs.

Should the downsizing parents of adult children help them pay for a place of their own, however briefly? Rygiol thinks this is a plausible idea in some cases.

“If you can afford it, maybe give the kids the equivalent of six months' worth of rent for a modest apartment, plus the money to cover the security deposit,” he says.

-- Consider buying an inexpensive place where your offspring could live temporarily.

Clearly, many parents are money-strapped as they head toward retirement, which is the reason they must downsize. They need to take what equity they have in their big home and use those funds to buy their smaller place. Because of this need, they don’t have extra discretionary cash.

But retiring parents who have ample funds might consider purchasing a small investment property where their offspring can live for a limited period until they’re on their feet financially, says Donna Goings, a Virginia real estate broker affiliated with the Residential Real Estate Council (crs.com).

She recommends that anyone considering this plan make sure their offspring know the property is for their short-term use only and will likely be converted to a rental property in a few years.

Interested in the idea? Then search for a place that should be easily rentable in the future, perhaps because it’s located near a university where student housing is always in demand or because it’s situated in a popular resort community.

“Alternatively, you might buy your son or daughter an inexpensive duplex. They can live in one side and rent out the other for income to help support themselves for the short term,” Goings says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

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