Stats Say Millennials Are Staying With Their Parents In Ever Increasing Numbers
With job security fragile and a status quo sweeping the nation, millennials are staying out of the housing market.
It’s great to have all the family under one roof for the holidays, isn’t it? But what if they never leave? That’s the reality facing many American families—as the percentage of young Americans living with mom and dad jumps to a 75-year high, according to census data by Trulia and first reported in the Wall Street Journal.
Perhaps, wary of growing up during the financial crash of 2008 or burdened by student loans and unable to save for a down payment or rent, millennials are choosing to fly the coop for college and then fly right back and stay there. In 2015, almost 40 percent of young Americans were living with their parents, siblings, or other relatives—the largest percentage since 1940. That number, though, probably doesn’t account for millennials who give their parents address as their fixed abode but travel elsewhere—whether for freelance, work, or pleasure—in the meantime.
The economic fall-out from millennials staying home could be far reaching. The “starter home” as it’s often called—usually a fairly cheap three-bedroom ranch, or a townhouse, or condo—never gets started because new buyers aren’t biting. This creates a domino effect up the housing ladder. The family home, the kind of place millennials grew up in, stays off the market because parents can’t downgrade with their kids still being home and thus, the retirement home—perhaps a cottage in the country or a condo in the city never gets sold.
Also, with parents often still ponying up for a higher cost of living—groceries, utilities, etc.—they have less expendable cash to take vacations and make the kind of real estate moves they always envisioned in their golden years.
The housing industry has had to accommodate for the downturn accordingly. 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, on the other hand, grew by just 200,000 over the same period, according to the Harvard Joint Center for Housing Studies. Stricter lending criteria and high rents and prices may have fueled part of the reluctance for millennials to move out.
Also adding gasoline to the fire is the fact that buying a house is a major commitment—and frankly, committing to anything—whether it’s watching a TV show at a certain time, a cell phone plan or a nine-to-five job—is not on many millennials’ radars.
With almost 37 percent of the US population saying that they have worked remotely, and that number being likely to rise, the rejection of a fixed place to live, which often accompanies a fixed place to work, doesn’t seem about to change anytime soon. It does create potentially seismic ramifications concerning the future of real estate in America.
The super-charged housing markets in places like New York and San Francisco are largely fueled by the jobs there—whether it’s Silicon Valley or Wall Street. If tech start-ups and financial trading can eventually move to a more mobile platform, with employees logging on for meetings in group chats (an idea Yahoo!’s Marissa Mayer rejected when she took over in 2012), then the notion suggested by author Tim Ferriss in 2007’s “The Four Hour Work Week”—of living in pesos and earning in dollars—may manifest in magnitude. It could see conventional housing give way to more short-term communal type living.
A big driver in the US housing market, which thus far seems millennial-proof, is foreign investment. Wealthy citizens from China, India, Russia, Dubai and elsewhere are keen to get a foothold in American real estate. They want their children to attend American universities and be a part of the American workforce. And the jobs often favored by immigrants are more traditional in nature—medicine, engineering, banking. Those are the positions that generally favor a fixed location and, thus, a fixed household.
If 2016 has taught us anything, it’s that more than ever the status quo is up for grabs. When predicting the future, it’s best to forget the past. That goes for real estate too. The only thing that can be relied upon is that there’ll always be a place to crash at mom and dad’s.
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