More Millennials Living at Home Suggests Economy Not Strong Enough to Support Young Adults
Being 20–30 years old today is scary. The “Millennials,” that is to say, those born in the late 1980s to early 1990s—who grew up with the Internet—are having a tough time in this economy. More of them are living with their parents than at any time since 1940. (Source: “Percentage of Young Americans Living With Parents Rises to 75-Year High,” The Wall Street Journal, December 21, 2016.)
The combination of more economic uncertainty, tougher bank lending standards (a direct result of the sub-prime mortgage crisis), and higher costs of living has translated to dropping demand for housing. Even as the number of under-30-year-old adults has risen by five million in the past decade, the number of related households has only risen by 200,000 over the same period, says the Harvard Joint Center for Housing Studies. (Source: Ibid.)
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A famous French song of the 1960s described 20-somethings as living the “beautiful age.” Well, no more. The first sign that something’s wrong is that in the U.S., more young people cannot afford—or find too many barriers preventing them from being able—to move out of their parents’ home.
The phenomenon of young adults returning to live with their parents is not just growing in the United States, although this trend suggests that the U.S. economy has lost its dynamism.
Some 40% of young Americans lived with their parents or other relatives in 2015. That’s the highest percentage since 1940! (Source: Ibid.)
Why is that significant? The years from 1929–1940 carried the weight of the Great Depression. The fact that so many millennials are living in conditions similar to the immediate post-depression period is depressing.
It suggests that the American economy has not really recovered from the so-called Great Recession of 2007-2008. Indeed, before this period, the percentage of 20-somethings living with their parents was about 33%. (Source: Ibid.)
Yet, every day the headlines tell us that the economy is growing, job numbers are increasing, and all that good stuff.
The rising costs of real estate and rent are clearly a problem. This will cause a headache for home builders and mortgage providers.
