Why kids aren't moving outParents said their younger adult children, defined as those aged 18 to 22, were living at home because they were saving money while they were enrolled in school. The vast majority were also unemployed or employed only part-time, another factor that limited their ability to move out into their own homes. Parents said older adult children, defined as those aged 23 to 34, were living at home to save money while they furthered their education. Other factors for this older age group included inadequate income to move out and being unmarried. The trend raises questions and concerns about household formation, an important factor in buyer demand for for-sale housing, whether new or resale.
(Image courtesy of Fannie Mae)
More living with parentsAccording to Postles, an average of 27 percent of 18-to-34-year-old adults lived with their parents between 1990 and 2006. In 2013, 31 percent of that age group still lived at home, a significant increase to a total of about 22 million young Americans. Young adults, and particularly those in their early 30s, historically comprised a substantial proportion first-time homebuyers. The fact that these young people have delayed their decision to start a new household, regardless of the reason, contributes to lower demand for ownership and rental housing.
The importance of young, first-time buyers
Young, first-time homebuyers are essential to a healthy real estate market. In addition to historically making up a very large percentage of home purchases, first-time buyers tend to purchase smaller “starter” homes, the homes that existing homeowners have put on the market. Without young buyers snatching up inventory, there is less overall demand and less opportunity for move-up buyers (existing homeowners who are purchasing a larger, more expensive home) to sell and find a new home. Without this “flow,” the market sputters.