Lennar, a well-known and fairly traditional home builder active in California, made the news recently because they are offering a new product in their Crescent Heights at Sky Ranch subdivision in Santee, a suburban city east of San Diego. One of the three models offered incorporates what they are calling their NextGen, Home Within a Home. Essentially, this is a studio apartment, with a separate one-car garage, included within the same structure as a fairly standard 4-bedroom (plus ‘Bonus Room’), 3-bath, 2-car garage suburban home. The studio unit has its own separate entrance from the outside, kitchenette and space for a stacked washer and dryer.
The home is priced at $610,000, and has about 3,650 sq.ft. in total, or about $167/sq.ft. For the San Diego market, it is in about the middle of the price range.
Is there a market for this “new” type of home? Lennar seems to think so, and the national press has been talking about the demand for multigenerational housing for some time. CNN Money wrote about it in April 2012, a year ago, the New York Times pointed out that it was a new trend a year before that, a recently published book, Together Again, notes articles going back to at least 2005 on their promotional website, AARP has a whole blog site dedicated to the issue. It has been discussed in various “learned journals” (I happen to like the article in New Geography).
This is not Lennar’s first or only foray into multigenerational homes, they have Next Gen homes on offer in five states and fifteen cities. They even have a multifamily 1,900 sq.ft. unit in Mission Viejo. Some of the floor plans look more like a home with servants’ quarters might have looked a hundred years ago, and some of them may be used that way, especially given the size of the homes (one of the models on sale in Florida has a 2-bedroom 790 sq.ft. accessory unit attached to a 2,200 sq.ft. “main home”–this is more of a duplex than a home with small apartment for granny).
California created a law to encourage creation of second units or “accessory apartments” in single-family homes back in the late 1970s, but it allowed cities and counties to impose various restrictions, and most of the local jurisdictions did everything they could to make sure not one unit was produced. Eventually, a few localities opened up to the possibility that these accessory units, often called “granny flats,” would not result in the end of the world, and allowed limited production. HUD funded a study on the progress of the idea in 2008, that was limited to communities that had to rely on their existing housing stock to accommodate growing demand, usually because of growth controls.
Whether this is classified as a duplex or a single multigenerational home, it should qualify for a standard mortgage and, depending on pricing and the local market, may qualify for an FHA-insured mortgage. The question is, will these new “two-fers” break the barriers to modifying existing homes so that owners can remodel or add on new accessory apartments, both as a way to accommodate their close relatives, and as a way to supplement their incomes through renting the new units, while at the same time creating needed new housing.
The interesting thing to me is that the product being offered by Lennar seems to be directed more at the graduate than granny. That is, it is the family with a kid who has failed to launch, or left and returned, that seems to be the primary target for this Next Gen home. In fact, despite the looming wave of Baby Boomers about to retire with inadequate resources to pay for their expected lifespans, the impetus for these new Home Within a Home products seems to be adult children returning to the nest–graduates, not grannies.