A few decades ago, returning home to live with Mom and Dad for an extended period of time after college was not without a certain stigma attached. Young adults were expected to be independent and self-sufficient in older generations, and while that is still largely the case, more and more young Americans are choosing to live with their parents to save money until they have the financial means to provide for themselves.
According to the Washington Post based on data from real estate tracker Trulia, the percentage of American young adults living with their parents is at a 75-year high, with nearly 40% of the millennial generation (young adults between the ages of 18 and 34) living with their parents or other family members in 2015. This is the largest percentage since 1940.
Even with recent job growth since the economic recession, this trend has been on the rise since 2005, when the number of young adults living with relatives was only one in three. In previous periods of recession, the number of young people living with their parents dropped off as economic conditions improved, but that is not the case anymore, as this all-time-high rate demonstrates.
As a result of more millennials returning to live at home than ever before, millennials are occupying a much smaller share of the housing market than would be expected for the largest generation in U.S. history. According to research from the Harvard Joint Center for Housing Studies, the number of adults under the age of 30 has increased by 5 million over the last decade, but the number of households for that group did not rise in proportion, growing by just 200,000 over the same period. This could be due, in part, to the fact that the barriers to owning a home are much steeper than they used to be. Even with the job market gradually improving, housing prices are not. Rent prices are on the rise in many cities and mortgage-lending standards are stricter than they used to be.
Additionally, millennials as a whole are getting married and starting families later in life than previous generations. Without a combined income to work with, homeownership is out of reach for many millennials. The Harvard Joint Center found that of those aged 25 to 34, only 40% of those earning less than $25,000 headed their own household. The rate is at 50% for those earning between $25,000 and $50,000 and 58% for those earning more than $50,000 in annual income. These statistics just go to show how inextricably linked income and homeownership are. Even as the millennial generation is expected to double its number of households by 2025, it still begs the question of what the long-term consequences of delayed homeownership will be.