Home > Personal Finance > Millennials Are Just as Likely to Live With Parents as to Own a Home

Comments 0 Comments

When the housing market rebounds completely, millennials will lead the way. More than two-thirds of first-time homebuyers are millennials, according to the National Association of Realtors, and that makes sense — people under 34 are the most likely first-time homebuyers. But there’s only one problem:

Millennials are just as likely to live in their parents’ home as they are to buy a home right now, the data shows.

Among Americans born between 1981 and 1997, 26% live with family, and 26% own a home, according to data from the U.S. Census Bureau and the Pew Research Center, and placed in context on this infographic posted by real estate firm UpNest. Worse yet, even as the economic recovery plods along, this live-at-home-into-your-30s trend is actually growing. In a recent report called “More Millennials Living with Family Despite Improved Job Market,” the Pew Research Center found that 71% of millennials were living independently in 2007, but by 2015, only 67% were. And during the past four years, the share of young adults living with their parents has risen from 24% to 26%.

These are historically low household formation rates. How low?

“In fact, the nation’s 18- to 34-year-olds are less likely to be living independently of their families and establishing their own households today than they were in the depths of the Great Recession,” Pew says.

The problem reaches stubbornly deep into older millennials’ lives, too. In 2014, 14.7% of those aged 25-34 lived with their parents, the highest percentage recorded since the Census Bureau started counting in 1960.

That’s a serious problem for the housing market recovery — and it’s a problem for retailers too, because they aren’t selling the towels, couches and silverware needed by new homeowners.

Mortgage broker and market expert Logan Mohtashami said he sees the impact of delayed household formation every day, but he’s optimistic that the issue is a one-time shift in the way young adults live.

“Everything is moved up a few years,” he said. “(Ages) 28-37 is the key mark for homebuying.” The 21-25-year-old age group is the largest demographic in America, he added. (Here’s a CIA World Factbook age pyramid).

“They still need more time,” he said. “Years 2020-2024 will come bigger numbers.”

Plenty of other data points support this delay theory. Americans are waiting five years longer to get married than they did in 1970, and about four years longer to have children.

Why Millennials Are Taking Their Time

High student loan balances and poor job prospects are frequently blamed for this, but they tell only part of the story. The student loan balance picture is a mixed bag. A study by Goldman Sachs last year showed that graduates with average college loan debt of around $30,000 were no less likely to buy a home than their debt-free peers. On the other hand, one-quarter of all graduate school students owe more than $100,000, which takes most of them out of the homebuying pool. (While a history of on-time student loan payments can boost credit scores, too much debt relative to income can make it difficult to qualify for a mortgage. You can see how your student loan debt is impacting your credit by checking your credit scores for free each month on Credit.com)

Meanwhile, the top-level millennial unemployment rate is hovering near 7.5%, about two percentage points higher than the overall rate. Still high, but down dramatically from the depths of the recession. On the other hand, labor participation rates of millennials are alarmingly low. And millennials’ who graduated during the recession and are working still see lingering impacts in their income. Young workers tend to get raises by changing jobs, an option that wasn’t available to many during the past seven years. Combined with the impact of missing a year or two of earnings due to unemployment, the long-term loss of income can be staggering. FiveThirtyEight.com notes that millennials who graduated during the recession are earning 36% less than peers who graduated in 2007. That’s certainly the difference between living at home and owning a home.

Still, Mohtashami is hopeful the millennial drag will be temporary.

“Three to six years after marriage, college-educated Americans have kids and buy,” he said. “We will have a lot more of them in (2020-2024).”

More on Mortgages & Homebuying:

Image: IDC/amanaimagesRF

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team