Weekly Housing Trends

The big story

Dan Ellington/Ellington Elite Realty

When Dan Ellington began house hunting in Chicago, he knew he needed a place with enough room for his wife, daughter, and his mom.

“My mother has MS, so this allows me to keep a close eye on her,” he explains. Meanwhile, “my daughter learns so much from being around her grandma every day.”

As a real estate agent, Ellington has noticed a surge in buyers shopping for multigenerational homes. “Demand is increasing due to affordability issues,” he explains. “We save on housing, food, and childcare, while regaining a sense of community. My great-aunts lived this way back when our family first came to Chicago, and I think it’s making a massive comeback.”

The numbers back it up: One in three US adults 18–34 currently live with their parents, and many stick around after they have their own kids. In the past decade, the number of households with at least three generations under one roof has grown from 3.2 million to 3.9 million. Although they make up just 4.5% of listings, homes with keywords like “in-law suite,” “granny flat,” or “guest house” attract 13.5% more views and carry a median price of $709,000—about 65% higher than typical listings, according to Realtor.com. Even after adjusting for size, multigenerational homes sell for $262 per square foot, compared with $215 per square foot for a standard house.

“Buyers are not deterred by the higher price tags,” explains economist Hannah Jones at Realtor.com. “The demand is strong, and supply is struggling to keep up.”

A multigenerational “mismatch”

Multigenerational homes are common in pricy areas like California: Los Angeles tops the list nationwide with 23.7% of listings, followed by San Diego (22.7%), San Jose (18.0%), San Francisco (17.4%), and Riverside (14.9%). Meanwhile, the affordable Midwest has the fewest, with Milwaukee, Detroit, and Cleveland at 1.5%, 2.0%, and 3.1%, respectively.

Still, whenever a multigenerational listing does pop up in Detroit, it attracts 82% more views and commands a 120% higher price. For Jones, this steep premium suggests “a real mismatch between what buyers are looking for and what is actually available.”

The investor angle: Find properties with basement apartments or ADUs—or add them. The demand is there, but supply isn’t, and profits will follow.

“I have bought several homes where I’ll add value by converting basements into mother-in-law suites,” says Colorado-based real estate investor Brett Johnson. In fact, “I will consider a project only if there’s a separate outdoor entrance or a clear opportunity to add one.” And even if Mom doesn’t move in, the space doubles as a rental property.

Although multigenerational homes make a lot of sense in a world where many can’t afford to live on their own, “it’s a lifestyle choice as much as a financial one,” points out Ellington. “For my family, the ability to support my mother while giving my daughter that connection to her heritage is worth every bit of the effort.”

      

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What's up this week

Realty check

alexeys/Getty Images

💰 The best place to own a luxury home: Last year, it was Detroit and St. Louis. This spring’s hot spot is yet another shocker.

🔒 Loan officers are urging clients to lock in their rate, stat. Here’s why, and for how long.

💡 This mini data center fits in your yard—and it actually lowers your energy bill rather than hogging it.

🛒 Black Friday for brand-new homes: New construction prices have dropped to their lowest level in nearly five years. Check out how cheap a new house is right now.

🤑 Second homes are getting tax hikes in states across the US. But homeowners have found a genius loophole to avoid them.

🐻 AI-upgraded home security cameras are sounding alarms on housefires, break-ins, and bears. Problem is, these warnings are so off-base you’ll laugh.

😱 This retiree invested $1.5 million in two properties. Their current value? Nearly $0. Here’s what went wrong.

🥹 Imagine, a home loan that’s “just people being good to each other.” No wonder it’s gaining ground.

⁉️ Zillow Gone Wild turned its homes into a guessing game. Spoiler: You’re going to be wrong.

Real talk

Charles Lawson/The Highlander Studios

Why buy a boring old vacation home when you could embark on a real adventure at sea? A lighthouse for sale in the Chesapeake Bay near Reedville, VA, could set you on your merry way for $450k. Here’s more from listing agent Beth Groner.

Q: What’s the story of the Smith Point Lighthouse? “The owner, Dave McNally, purchased this lighthouse sight unseen in an auction by the Department of the Interior. He renovated over several years, ferrying materials and workers back and forth. His upgrades included repairs and new roofing, as well as a full kitchen, a full bathroom with a shower, and other systems to make the lighthouse feel like a home. He’d visit the lighthouse on annual trips and stay there for days with his family and friends.

Q: How much interest have you gotten from buyers? “Hundreds of people have reached out to talk about their ideas. Most are committed to historical restorations. We also get many inquiries from nonprofit and educational groups who see the potential to turn this into a living museum. The short-term rental community has also been very interested; it would be the ultimate unique stay. It would be difficult to turn this into a short-term rental due to the uncertainty of weather and accessibility. Not insurmountable, just challenging.”

Q: What are the challenges of owning this lighthouse? “Beyond weather and watercraft access, maintaining the exterior of the lighthouse—which is subject to wind, rain, storms, pounding surf, and salt—would be your biggest challenge. It is also not a property that would be easily insurable, so protecting your investment involves being self-reliant.”

Q: What advice would you have for any prospective buyer? “If someone is considering this project, Project Lighthouse on Facebook and the adventures of Rich Cucé and his son would be a great source of information and inspiration. The new owner won’t regret owning this lighthouse; it will be an adventure, a story for the ages of their making.”

Click here to read more about this lighthouse and see more photos.

      

You asked, we answered

Q: Are AI data centers good or bad for real estate?

Natalie Behring/Contributor/Getty Images

The US has over 3,000 AI data centers, with thousands more in the works. Yet 47% of Americans don’t want one in their backyard—worried about the hum of cooling fans, water consumption, and rising energy costs, which can impact how buyers size up real estate near these facilities.

“Buyers are reluctant to buy residential homes in close proximity, due to concerns about noise and traffic,” says Daniel Cabrera, a real estate investor in San Antonio, a city with 10 data centers and more on the way. One property he encountered recently had been stuck on the market for 75 days, passed over by two investors leery of a nearby data center expansion. Cabrera bought it anyway. Why? Because data centers also bring jobs: “Areas 10 to 20 miles away have increased demand from skilled tradespeople.”

One study on “Data Center Alley” in Loudoun County, VA—home to 250 facilities—found that the assessed value of residential properties soared from $556,000 in 2017 to $1 million in 2026. Another study found that home values dropped the farther they were from data centers. Why? “There are financial benefits to owning property near data centers like improved infrastructure, revenue, and schools,” explains Jeff Gyzen at Arcadis, who is currently designing the Terra Data Center in San Jose, CA. Although he “wouldn’t buy across the street from one,” a couple blocks away is no big deal, assuming the data center is considerate of the local community. If the facility is less friendly or you can’t tell where it stands, “to avoid air quality and noise issues, I wouldn’t purchase a property within half a mile.”

Got a question about real estate? Ask it here, and we’ll answer it in a future issue.

Housing market of the week

Pratik Pathapati/Rework Cash Offers; JasonDoiy/Getty Images (city).

This week, we chatted with Pratik Pathapati at Rework Cash Offers about Sacramento, CA.

Average home price: $479,766 (down 2.5% YoY)
Homes that sell over list price: 38.1%
Homes that sell under list price: 47.2%
Average rent: $1,995/month

How he got started: “I helped flippers find deals and partnered with them on houses to learn how it all works before doing it on my own.”

His market’s pros: California’s capital remains a seller’s market with a healthy demand from buyers, “especially from people relocating from more expensive regions like the Bay Area,” says Pathapti. He recently bought a home for $295k, expects to spend $50k on renovations and $30k on closing costs and other expenses, then hopes to sell it for $400k, for a $30–$40k profit.

The cons: “Inventory is tight, so finding good deals can be difficult,” he says. “You won’t be able to search on the MLS and find turnkey cash-flowing homes.”

His advice: Shop off-market for bargains by searching public records for properties with code violations, tax liens, or in pre-foreclosure. “Look for value-add deals where you can go in and improve the property to force appreciation,” he says.

Got a home or housing market you want to highlight in The Playbook? Tell us more about it here, and we’ll consider featuring it in an upcoming issue.