Multigenerational living is reshaping housing and influencing the broader business landscape in Phoenix.
For decades, the American housing model centered on independence. After World War II, suburban expansion and a surge in homebuilding made it possible for families to spread out, and multigenerational living declined. By the early 1970s, just 7.8% of U.S. households included three or more generations under one roof.
Today, that pattern has reversed. By 2021, roughly 18% to 20% of Americans lived in multigenerational homes, driven by rising housing costs, caregiving needs and changing family dynamics.
In the Phoenix metro area, the trend is especially pronounced. Local estimates suggest nearly 85,000 families in the Valley live in multigenerational households, reflecting similar or slightly higher adoption than national trends.
“Multigenerational living is no longer a niche scenario,” says Trevor Halpern, CEO of Halpern Residential at eXp Realty. “For many buyers, it’s becoming part of the baseline conversation. The question isn’t whether they want a home, but whether it can support multiple generations over time.”
That shift is influencing how homes are used, built and marketed, while creating ripple effects across the broader business environment.
A Response to Affordability and Supply Constraints
Phoenix’s housing affordability challenges remain a key driver. Supply has struggled to keep pace with demand, while higher mortgage rates continue to complicate buying and renting.
For families, combining households can reduce expenses and create stability. Aging parents require support, while younger adults are staying home longer due to student debt and housing costs. Demand is growing for homes that accommodate multiple generations without sacrificing privacy.
Policy Shifts and Development Opportunities
Local and state policy changes are helping to accommodate that demand. Phoenix now allows accessory dwelling units, often called casitas, in residential neighborhoods. State legislation that took effect in 2025 expanded that flexibility by requiring cities to permit both attached and detached ADUs on single-family lots.
These changes create opportunities not only for homeowners but also for builders, contractors and investors. ADUs introduce a flexible product that can serve as housing for family members, rental units or home-based workspaces.
“ADUs have become one of the most practical tools for families trying to adapt,” Halpern says. “They allow people to stay connected while maintaining independence, and that flexibility is driving demand.”
How the Market Is Responding
On the ground, multigenerational living takes several forms. Backyard casitas are becoming more common, while some homeowners are converting garages or expanding layouts to create semi-independent spaces.
Builders are also adjusting. Newer developments increasingly include floor plans with dual primary suites, private entrances, or integrated guest quarters designed for multigenerational use. These features are shifting from niche offerings to competitive differentiators.
Buyer behavior is shifting accordingly. Homes with flexible layouts or separate living spaces are attracting increased interest and are influencing pricing, marketing strategies and time on market.
Economic Implications beyond Housing
The impact extends beyond residential real estate. As households consolidate, spending patterns shift, affecting demand for housing, construction and home services. ADUs introduce potential rental income, allowing homeowners to offset costs and influencing property values.
There are also workforce implications. Employees managing caregiving responsibilities may benefit from living closer to family, improving stability and reducing disruptions tied to care logistics. For employers, that can translate into stronger retention and more consistent workforce participation.
“There is a broader economic story here,” Halpern says. “When housing becomes more flexible, it changes how people make decisions about work, family and long-term investment. That has an impact well beyond the housing market.”
A Structural Shift in How Housing Functions
Multigenerational living is not new, but its resurgence reflects modern economic conditions. In Phoenix, zoning changes, evolving buyer preferences and affordability pressures are reshaping how housing is used and developed.
As these trends continue, homes designed for flexibility and long-term use are likely to remain in demand, reinforcing a shift that connects residential real estate more directly to workforce dynamics and the broader economy.
