November 9th, 2011
The number of young adults who move back in with their parents, often after college, has risen dramatically over the past few years. This is in part due to the current economy as well as high unemployment rates for young people. The trend of moving back in with ones parents, however, is having an effect on the housing market.
According to a recent CNN Money article, 19% of males age 25 to 34 live with their parents today, a 5 percentage point increase from 2005. 10% of women in that age group live at home, up from 8% six years ago.
The numbers are much higher for 18- to 24-year-olds, with 59% of males and 50% of females living with their parents, up from 53% and 46%.
This has caused a decrease in the number of new households being formed, and a decrease in demand, which in turn lowers home prices. If these young adults were renting, rents would rise, leading to more people deciding to buy.
On the other hand, by living back home, young adults are saving thousands of dollars in a tough economy. This savings could be put towards a home purchase later on.
What are your thoughts on this “boomerang generation” and its effect on the market?