It’s been a subject that you hear repeatedly on TV and on the Internet; millennials who are moving back home and living in their parents basement (or other parts of the house) because they can’t find a job and, even if they do, can’t actually afford to rent a place of their own.
What’s happening in the last few years however is that these millennials still haven’t moved out, even though some of them have gone on to find great jobs, have started careers and now earn decent money. Even more, many of them don’t seem to be in much of a hurry to get married, purchase a home and/or have children.
What that has done is pushed in the homeownership rate among 18 to 34-year-olds, considered ‘young adults’, to one of the lowest levels it’s ever been, 13.2%.
That’s according to Census Bureau data gathered up and analyzed by Trulia, and what it means is that the housing market is getting worse rather than better.
There are a number of factors contributing to the situation, like there always are. First off the sluggish job market has made it much more difficult for young adults and even college graduates find a job. On top of that many of them have heavy student loan debts and are facing lending standards that have been tightened my most banks.
When you add to that the fact that these so-called millennial’s are moving out at an incredibly slow pace, everything together spells trouble for the housing market. For example, so far in 2014 just over 31% of young adults are living with their parents, which is down only slightly from a year ago.
Even worse for the housing market is that when many of these millennial’s do finally leave mom and dad’s home, they aren’t doing it because they’re buying their own home and starting a family, but instead renting a home with friends, siblings and other relatives or other people they know.
What this has led to is a “headship rate”, the percentage of people who either rent or own a home, falling to a low of 36.6% in 2014, which is down from 36.9% a year ago.
In fact, according to Trulia, only 425,000 new households were actually formed in 2013, much less than the 1.2 million (approximately) that would have been started if the headship rate has not declined so badly.
All of which leads to one simple conclusion; the housing market that’s been struggling for the last few years will continue to struggle as long as Junior (or Princess) keeps staying home with his or her parents.