Nearly 40 percent of young Americans, between the ages of 18 and 34, were living with their parents, siblings or other relatives in 2015, marking the highest rate of stay-at-home adults since 1940, according to a new data from real estate tracker Trulia.
The number of young adults sticking around has been increasing since 2005, according to the Wall Street Journal. Ten years ago, before the recession hit, one out of three were living with their family.
However, unlike in 1940, when the U.S. was in recovery mode following the Great Depression, younger Americans are not wanting to venture out on their own, despite the recent economic upturn:
The trend runs counter to that of previous economic cycles, when after a recession-related spike, the number of younger Americans living with relatives declined as the economy improved.
The result is that there is far less demand for housing than would be expected for the millennial generation, now the largest in U.S. history. The number of adults under age 30 has increased by 5 million over the last decade, but the number of households for that age group grew by just 200,000 over the same period, according to the Harvard Joint Center for Housing Studies.
Much of that decision to stay home, analysts say, is influenced by lofty rent costs in big cities and rigid mortgage-lending standards, which make it more difficult for young adults on limited incomes to fly solo.
“I don’t think those are challenges that are going to keep young households permanently out of the housing market, but it may keep their homeownership rate near historic lows for likely the indefinite future,” Ralph McLaughlin, Trulia’s chief economist, told the WSJ.
In 1940, one year after the official end of the Great Depression, the share of young adults living with mom and dad hit a record high of 40.9 percent and it fell to a low of 24.1 percent by 1960. It hovered at just over 30 percent from 1980 to the early 2000s, when the percentage started increasing.
But in addition to affordability concerns, young Americans are staying home longer because they are taking more time to get married and start families of their own:
Census data also show younger Americans are getting married and having children later in life than previous generations. Even so, economists project the historically large millennial generation will more than double its current number of households through 2025.
All of this has made the housing market uncertain when it comes to millennial-aged buyers.
“Is it going to happen at the same rate, and is it going to happen at all for homeownership?” Tim Kane, president of California builder MBK Homes, wondered, noting that household formation is slower for younger generations.