Not Your Granny’s Flat: How the Rise of Multigenerational Living in California Is Driving a Boom in ADUs

Driven by skyrocketing housing and childcare costs, more and more families are pivoting to multigenerational living, particularly in high-priced California where "granny flats" and "in-law suites" have gone from niche additions to strategic features.

Co-living arrangements come in all shapes and sizes, but the typical multigenerational household has five family members sharing a four-bedroom home, with a median annual household income of $131,000.

Nationally, nearly 4 million owner-occupied households, or 4.5%, are made up of three or more generations of the same family, up from 4.3% in 2019, according to a new Realtor.com® report based on the U.S. Census Bureau's American Community Survey 1-Year Data from 2024.

Across the largest 100 U.S. metros, Honolulu leads the nation with 12% of local households living multigenerationally, closely followed by California markets like Riverside (10.9%), Stockton (10.1%), and Bakersfield (8.8%). 

A limited number of East Coast markets also stand out for having elevated shares of multigenerational households topping 6%, including Lakeland, FL, Miami, and New York. 

However, Realtor.com economist Jiayi Xu says Census Bureau data does not tell the whole story. An analysis of Realtor.com listings sheds light on supply and demand trends, pointing to where extended families will be living in the near future. 

Demand is reshaping the inventory

In 2025, for-sale properties geared toward cohabitating parents, children, and grandparents, whose descriptions often include terms like "granny flat," "in-law suite," or "accessory dwelling unit (ADU)," accounted for over 6% of all active listings. 

While these larger properties catering to extended families tend to carry a 65% price premium, with the typical multigenerational home priced at $709,000, they attract roughly 13% more online views from would-be buyers and sell just as quickly as standard single-family homes, reflecting strong demand. 

The epicenter of this inventory shift is California, home to the five metros that boast the highest shares of multigenerational homes for sale, with Los Angeles in the lead with nearly 24% of listings, followed by San Diego (22.7%), San Jose (18%), San Francisco (17.4%), and Riverside (14.9%). 

Xu argues that co-living's popularity in the Golden State is no coincidence. She points to a "perfect storm" of factors: deep-rooted multigenerational traditions among Asian and Hispanic communities, surging housing costs that price out singles or nuclear families, and a deep inventory of homes built or adapted specifically to house multiple family units under one roof.  

"Notably, California metros also show relatively modest price premiums between multigenerational and standard listings, just 1.6% in L.A. and 8.4% in San Francisco, suggesting multigenerational homes are more normalized and widely distributed across price tiers there," says Xu.

California's luxury playbook

While rising housing cost and a shortage of affordable childcare often drive co-living out of necessity, wealthy California families are approaching the trend differently, pivoting to multigenerational properties as a sophisticated real estate strategy.

In California's Bay Area—the global technology epicenter—Alexander Kalla, a real estate agent specializing in luxury homes, says multigenerational living spaces serve a distinct purpose.

"For my clients, these 'granny flats' are rarely just a place for legacy family," Kalla tells Realtor.com. "They use it as 'Step-Down' for their aging parents who move into a modern, detached ADU to maintain independence."

In San Jose, where the city has streamlined the ADU permitting process to meet the rising demand, Kalla says these units are built not only to house relatives, but also to rent out, providing a secondary revenue stream to offset homeowners' skyrocketing Silicon Valley mortgages.

Meanwhile, in the South Bay part of Silicon Valley, Kalla says multigenerational living is often a high-level financial play.

"I've worked with several families who pool their resources to enter 'top-tier' neighborhoods of Saratoga, Los Gatos, and Cupertino, which they might not have considered individually," the agent points out. "By combining capital, these families secure legacy properties in world-class school districts, allowing three generations to benefit from the appreciation and lifestyle of a premier ZIP code."

Kalla adds that in ultra-premium Peninsula markets like Palo Alto, CA, and Woodside, CA, permitted, luxury multigenerational housing is a major selling point.

"It appeals to international buyers and tech executives who often have extended family visiting for months at a time, making these homes much more liquid," he adds.  

What's more, the multigenerational setups hitting the market in the Bay Area are a far cry from the "granny flats" of yesteryear. Instead, they are sophisticated living environments tailored to the high-tech Silicon Valley lifestyle.

"Given the proximity to major tech campuses, we are seeing a rise in 'NextGen' homes properties specifically designed from the ground up with a 'home within a home,'" explains Kalla. "These aren't retrofitted garages; they are architecturally integrated suites that feature smart-home automation and separate HVAC zones to ensure everyone’s comfort is managed independently."

Low supply vs. high demand

In the Midwest and the South, the multigenerational living landscape is strikingly different. According to the Realtor.com report, many markets in these regions have a severe lack of inventory coupled with intense demand driving up prices on the few available co-living properties to new heights.  

Across the top metros, Detroit has the smallest share of multigenerational homes, at just 2%, yet those rare properties command a staggering 120% price premium over standard listings.

Cleveland is not far behind, with just 3.1% of the metro’s listings offering co-living setups at a 107% markup.

At the same time, homes with in-law suites and granny flats in Detroit and Cleveland attract roughly 80% more page views than typical homes, giving sellers the license to charge top dollar for these sought-after properties.

“This pattern suggests that in lower-cost, inventory-constrained markets, multigenerational homes are a rare commodity attracting intense buyer interest when they do appear,” says Xu.