Millennials stay with parents to save costs

Even college-educated young adults in the US are more likely to live with their families today than in 2010. Experts say they need to leave the nest a
Last Updated 02 August 2015, 18:38 IST
During the recession near the end of the last decade, many young adults facing a dreadful job market moved in with their parents to save money. Now, jobs may be more plentiful and the economy has improved, but many members of the millennial generation have yet to leave the nest, according to a new study. In fact, even more of them are living at home now.

 An analysis of census data by the Pew Research Center has found that 18- to 34-year-olds are less likely to be living apart from family members than they were even during the depths of the recent recession, the worst economic downturn since the 1930s.
 “Young adults were the age group that was hardest hit by the Great Recession,” said Richard Fry, a senior researcher at Pew. “They are not fully healed from the damages.”  In 2010, according to the study, 69 per cent of 18- to 34-year-olds lived independently. During the first four months of this year, just 67 per cent of that same age group was living independently. From 2010 to April 2015, the share of young adults living in their parents’ homes hasincreased to 26 per cent from 24 per cent, the study said.

 In terms of sheer numbers, there are more young adults today than when the recession hit: The 18- to 34-year-old population has grown by nearly three million since 2007. But the number of them heading their own households has not increased, the study said.

It’s family time

 In the meantime, the  US national unemployment rate for young adults declined to 7.7 per cent in the first four months of this year, down from 12.4 per cent in 2010. While people with college degrees are more inclined to secure higher-paying jobs, the study found that even college-educated young adults are more likely to live with their families today than in 2010.

 Many housing analysts have been counting on young people to help lift the still-restrained housing market by buying their own condos or houses, moving out of rental apartments or their family home.

 Homeownership in America is at its lowest point since 1967, at 63.4 per cent, according to government data reported this week. Home sales are clearly on the rebound, but they remain lower than before the recession despite the increased population. One of the main reasons is that not as many people are entering the pipeline as first-time home buyers.

“We need the millennials to start leaving their parents’ homes and start out on their own for the housing market to normalise,” said Mark Zandi, chief economist at Moody’s Analytics. “This is going to be a problem if it continues.”

 Zandi said he was optimistic that young adults will set out on their own eventually and noted that his analysis of other sets of data show this slowly starting to happen. “My sense is that millennials are forming households,” he said, “but this is going almost entirely into rentals.”

 But rents are rising, particularly in popular cities like San Francisco, Denver and New York, and there are fewer apartments on the market. Vacancy rates recently hit their lowest level in 30 years.

 For young people moving into apartments, these higher costs limit spending elsewhere and make it harder to save for a down payment for a future home.

 From 2003 to 2013, the share of renters aged 25-34 who had so-called cost burdens — meaning they spent more than 30 per cent of their incomes on housing — increased to 46 per cent from 40 per cent, according to a report released last month by the Joint Center for Housing Studies atHarvard. The share that spent more than half their income on housing also increased, to 23 per cent from 19 per cent.

 During roughly the same period, the share of renters in that same age group with student loan debt jumped to 41 per cent in 2013 from 30 per cent in 2004, with the average amount of debt up 50 per cent, to $30,700, the Harvard report said.

 Some economists say that higher student debt loads may be partly to blame for so many young adults living at home. A staff report from the Federal Reserve Bank of New York in November concluded: “A substantial portion of the persistent increase in co-residence with parents among recent youth cohorts can be explained by increasing student debt balances.”

Living-at-home is widely accepted

The Pew study identified another group finding it hard to leave home: people 25-34 without any formal education beyond high school. They may not have heavy student debts but they are also the ones facing the greatest difficulties in the job market. Regardless of the reasons, the living-at-home phenomenon seems to be growing as an accepted part of popular culture. 

The dating site Match.com offers tips on maintaining a social life while living at home with an article titled, “Dating at Mom and Dad’s House.”

 Other sites offer T-shirts, in both newborn and grown-up sizes, that say, “I still live with my parents.” Blog posts from millennials discussing living at home abound.

Clarissa Wei, 24, moved into her parents’ home in Arcadia, California, just over a year ago after quitting her full-time job to become a freelance food and travel writer. Her main reason for moving back?

“Money,” she said.
 The house is big enough that she does not feel cramped by her parents,and it allows her to pursue her adventures, serving as a base for travel overseas from time to time. She said she was not sure how long she would stay at her parents’ house.
 “I haven’t really thought about it that far ahead,” Wei said.

(Published 02 August 2015, 15:41 IST)

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