Covid-19 Is Giving the Multigenerational Home Business a Big Boost

“We did not want Mom in any kind of group home setting, especially because of Covid-19,” said Ms. Hale. When Ms. Williams, who only this year retired from a 72-year-long career in nursing, saw the new home “she said this was just good enough to give her sufficient independence, and me peace of mind,” Ms. Hale said.

Theresa “Tree” Hale, 70, a retired paralegal, left, and her mother, Thelma Hall Williams, 95, who retired this year from a 72-year career in nursing.PHOTOS: CASSIDY ARAIZA FOR THE WALL STREET JOURNAL(2)

The Hale/Williams family is part of a shift that has emerged during the pandemic. It is a change that worries providers of traditional senior housing, but offers opportunity for other players.

Covid-19 has caused occupancy at assisted-living facilities and independent-living centers to slide by more than 2.5% in each of the last two quarters, the largest drop in occupancy on record, according to data from the National Investment Center for Seniors Housing & Care, a trade group for providers. The number of occupied beds at skilled-nursing properties has dropped even more, by just over 12% since the first quarter of the year, according to NIC.

Meanwhile, home builders are selling more houses designed for multigenerational living and rolling out more new designs for people who want their elderly relatives to live with them. Builders of accessory dwelling units—the technical term for backyard houses that can function as separate living quarters—say interest has exploded since lockdowns began.

Miami-based Lennar Corp., which closed on roughly 51,000 homes last year, will likely increase its Next Gen home sales by more than 20% compared with last year, said Jon Jaffe. the firm’s co-CEO and co-president.

Ed Suchora, area president for the Sarasota Division of M/I Homes, which builds about 7,000 homes nationwide a year, said the company recently created a new floor plan that incorporates a separate, multiroom space into the main floor of the home to fulfill a variety of needs, ranging from housing for an aging parent to home-office or home-schooling space.

The plan has been a big seller in the company’s Woodleaf Hammock community within a master plan development called Lakewood Ranch in suburban Sarasota, Fla., where homes sell for between $400,000 and $800,000. In Rivo Lakes in Sarasota, a similar design has also been highly successful, Mr. Suchora said, selling for between $600,000 and $1 million.

Bruce Thompson, chief executive of Urbaneer, a company in Grand Rapids, Mich., specializing in compact living solutions, launched a prefabricated ADU line in January. The ADUs cost between $125,000 and $200,000, permits and construction included, Mr. Thompson said, and range from 399 to 1,200 square feet. So far, the company has shipped 10 units and fielded hundreds of inquiries, Mr. Thompson said.

UMH Properties, a real-estate investment trust that owns and operates manufactured-home communities, rolled out a program in early September called Care Cottages by UMH.

The company will install an Urbaneer ADU on a property, charging an installation fee that depends on the customer’s lot and municipality; those costs may come in somewhere around $7,500 to $10,000, said Daniel Blumenkrantz, analyst at the Freehold, N.J.,-based company.

Then, the customer pays $2,000 a month for a minimum of five years; the company will remove the cottage when it is no longer needed.

On its website, the company calculates that a cottage plus in-home care can be cheaper than assisted living (a calculation that is, to be sure, highly dependent on individual circumstances and local costs).

“We’re hearing stories about how people went to visit their family members and couldn’t go into the facility and talked to them through the window,” said Mr. Blumenkrantz. “We figured there has to be a way around this.”

Ed Stevenson launched a prefabricated ADU company called SonderPods in March. The Novato, Calif., company has fielded 2,200 inquiries, has 21 projects under way and expects to deliver more than 52 in 2021, he said.

“We’ve had inquiries where they say, ‘We’re spending $7,000 to $9,000 on assisted living and we want to get my mother or father out of there,’ ” Mr. Stevenson said.

His ADUs range in cost, depending on size, permits and local conditions, he said. A client in San Jose is currently building a two-bedroom, 750-square-foot, solar-powered unit and spending $190,000, he said.

Carrie Shores Diller, co-founder of Bay Area-based architectural firm Larson Shores, created a division of her company in 2008 called Inspired ADUs that specializes in backyard cottages that serve elderly or disabled people. Before Covid, the division built about 11 of them a year in the Bay Area; currently, it has 62 under contract.

Ms. Shores Diller designed an ADU for Ravi Potharlanka, a 52-year-old telecom entrepreneur, that will house his mother, he said. Mr. Potharlanka will spend roughly $300,000 on a 600-square-foot house in his backyard in Danville, Calif. Ms. Shores Diller is also working on the design for a 570-square-foot unit for Keith Goodman and Margaret Phillips in Berkeley, Calif., which the couple, who are 55 and 57, respectively, will use for themselves.

Mr. Goodman, a retired hedge-fund manager, has leukemia and has been required to isolate himself from large gatherings for four years, he said. The pandemic has ratcheted up his need for social distancing, requiring Ms. Phillips to stop hosting her book club and to limit other interactions. That has made the need for a separate space more important during the pandemic, he said. They plan to spend about $360,000 on the ADU.

James and Angel Johnson are in contract to have a house built for them and for Ms. Johnson’s mother, Sheila Carr, in Danville, Calif. The 6,000-square-foot house will provide Ms. Carr, a 60-year-old retired day-care director, with her own 450-square-foot bedroom with a sitting area and bathroom. It will also provide more space than their current home, and offer a place where they can work remotely and their two children can engage in distance learning.

The couple, both 39-year-old technology executives, declined to say what they are spending to build the six-bedroom house which they expect to be completed by late next year; Toll Brothers said their model starts at about $2.7 million.

The new home, with three distinct office areas, the private quarters for Ms. Carr, and a large yard, won’t only give each family member space, but opens up the possibility that Mr. Johnson’s parents—retirees who live in North Carolina—might someday be able to live in an ADU on the property, he said.

Write to Katy McLaughlin at [email protected]