Intergenerational Living: A Solution to Modern Affordable Housing Challenges in Los Angeles
In the heart of Los Angeles, a city known for its sprawling metropolis and diverse cultural tapestry, an innovative solution to the affordable housing crisis is taking shape. Intergenerational living, a concept as old as humanity itself, is being revisited and revitalized in the modern context.
In this article, we will explore how multi-generational homes offer economic benefits and how they could reshape the future landscape of affordable housing solutions in Los Angeles. This approach aligns with the missions of real estate investment funds like FNX Impact Investment Fund, focusing on affordable housing in Los Angeles and the social impacts of real estate.
The Affordable Housing Crisis in Los Angeles
Los Angeles, a city with a vibrant economy and diverse population, faces a significant affordable housing challenge. Los Angeles County needs over half a million more affordable rental homes to meet the demand. The median price of a home in Los Angeles has skyrocketed, making it increasingly difficult for average families to afford housing.
Intergenerational Living as a Viable Solution
Intergenerational living involves multiple generations of a family living under one roof. This arrangement, once common, is gaining renewed interest as a practical solution to housing affordability. During the pandemic, the number of multigenerational households increased, highlighting the economic and social benefits of this living arrangement. In fact, according to data analyzed by Pew Research: “A quarter of U.S. adults ages 25 to 34 resided in a multigenerational family household in 2021, up from 9% in 1971.”
Economic Benefits
The Financial Burden of Housing in Los Angeles
In Los Angeles, housing is the largest component of household expenditure. According to the U.S. Bureau of Labor Statistics, households in the Los Angeles area spent an average of $77,024 per year in 2021–22, with $28,300 of that being allocated to housing. This accounts for 36.7% of the area’s household budget, significantly higher than the 33.5% U.S. average.
Utility Costs in Los Angeles
Utility costs in Los Angeles further add to the financial pressure on households. In November 2023, Los Angeles area households paid an average of 28.7 cents per kilowatt-hour (kWh) of electricity, which was 70.8 percent more than the nationwide average of 16.8 cents per kWh. Additionally, the average cost for utility (piped) gas was $1.827 per therm, 26.7 percent more than the national average.
Efficiency in Other Expenses: Cost-sharing extends to other areas such as groceries, transportation (e.g., gasoline costs, which averaged $5.156 a gallon in Los Angeles in November 2023), and maintenance costs, further reducing the economic strain on each family member.
Cost Sharing: In a city where the cost of living is high, sharing expenses among family members can significantly reduce the financial burden. Utilities, mortgage payments, and maintenance costs are divided, making it more affordable for each individual.
Reduced Need for External Services: With family members available to provide support, the need for external services like childcare and elder care is diminished, leading to further cost savings.
Social Benefits
Strengthened Family Bonds: Living together fosters stronger relationships and mutual support among family members.
Cultural Preservation: Intergenerational living allows for the transfer of cultural traditions and values across generations.
In Los Angeles, multigenerational living is more common among certain ethnicities, reflecting cultural traditions and the importance of family bonds. This living arrangement plays a crucial role in preserving cultural values and traditions across generations.
Ethnicities Engaging in Multigenerational Living
Native Hawaiian and Pacific Islanders: This group is the most likely to live in multigenerational households, with 19.9% of them living in such arrangements in 2022.
American Indian/Alaska Native Households: These households follow closely, with 14.9% living multigenerational.
Asian Households: In Asian communities, the prevalence is 13.5%. This is attributed to cultural norms that emphasize family cohesion and support across generations.
Hispanic Households: Hispanic families also have a high rate of multigenerational living at 13.2%, reflecting strong family-centric values within these communities.
Influence of Immigration: A significant factor influencing multigenerational living among these ethnic groups is immigration. Families often unite across generations when parents or grandparents move from abroad to live with family members who have recently immigrated to the United States.
Challenges and Considerations
Despite its benefits, intergenerational living comes with challenges. Zoning laws and housing regulations in Los Angeles, often designed with the nuclear family in mind, can be restrictive. Additionally, ensuring adequate privacy and space for all family members is crucial.
The Role of Real Estate Investment Funds
Real estate investment funds like the FNX Impact Investment Fund play a critical role in addressing affordable housing in Los Angeles. By investing in real estate funds focused on developing multi-generational homes, investors can contribute to solving the housing crisis while also gaining financial returns.
Investing in Intergenerational Living Projects
Development of Suitable Properties: Funds can finance the development of properties specifically designed for multigenerational living, with features like separate entrances and adaptable living spaces.
Revitalizing Existing Properties: Investment can also go towards renovating existing properties to make them suitable for multigenerational families.
Case Studies and Examples
Example 1: Los Angeles Multigenerational Housing Project
In a recent project in Los Angeles, a development funded by an investment fund transformed an old apartment complex into a multigenerational living space. This project not only provided affordable housing but also strengthened community ties.
Example 2: National Models
Across the nation, similar projects are underway. For instance, a project in Portland, Oregon, funded by a real estate investment fund, created a community specifically designed for multigenerational families, complete with communal areas and private living spaces.
Investing in real estate funds that focus on intergenerational living projects in Los Angeles not only addresses the affordable housing crisis but also contributes to the social fabric of the community. These projects foster a sense of belonging and community, crucial in a city as diverse as Los Angeles.
Conclusion
Intergenerational living offers a promising solution to the affordable housing challenges in Los Angeles. By pooling resources, families can afford housing in areas where it would otherwise be out of reach. Real estate investment funds play a pivotal role in this scenario, offering opportunities for investors to contribute to meaningful change while also securing financial returns. As we continue to navigate the complexities of the housing market, innovative approaches like intergenerational living will be key in shaping a more inclusive and affordable future for Los Angeles residents.
Disclaimer: This article is for informational purposes only and should not be considered as financial or investment advice. Please consult with a qualified financial advisor before making any investment decisions.
Endowed with vast expertise in financial and accounting management, Joumana Nasser is fundamental in providing the financial precision, transparency and accountability in FNX Development's real estate endeavors. Kickstarting her career post a business management degree from California State University-Northridge, Joumana navigated the intricate world of Bank of America's foreclosure department in 2010.
Transitioning through prominent roles, her command over sales, finance, and accounting steered her towards Agoura Hills Financial and eventually, the FNX Development Impact Fund. Joumana's unparalleled attention to detail ensures that figures are spot-on and timelines are met. At the forefront, she masterfully navigates finance and construction accounting, ensuring each project stands on firm financial ground.
Passionate about social causes, Joumana actively supports projects focused on children, disaster relief, education, and more.
