In line with the topsy-turvy world that’s been created by the Coronavirus pandemic, a majority of young adults likely eager to strike out on their own are instead moving in with family members. That trend poses a threat to new household formation as well as to rent rolls, according to several research reports.
As of July, 52% of 18-to-29 year olds were living with their parents, up from 47% in February, according to new research by the Pew Research Center. That level of young adults, who are members of Generation Z, moving home is the highest level that data point has ever reached. Before this year, the peak was 48% at the end of the Great Depression.
“These new living arrangements may have an impact not just on young adults and their families, but on the U.S. economy overall, reflecting the importance of the housing market to overall economic growth,” stated an article by the Pew Center that summarized its research. “Slower household growth could mean less demand for housing and household goods. There also may be a decline in the number of renters and homeowners, and in overall housing activity. Between February and July 2020, the number of households headed by an 18- to 29-year-old declined by 1.9 million, or 12%.”
Zillow also flagged this trend in June when it noted that high US unemployment during the pandemic led the number of 18-to-25 year old adults living in their parents’ or grandparents’ home to grow by 2.2 million. In total, 2.7 million adults moving back in with family grew by 2.7 million in March and April, representing an estimated $726 million in rent payments—or 1.4% of the rental market—every month, the real estate rental marketplace said.
However, on the plus side, Zillow noted, living with parents and not paying rent, could enable some Gen Zers to afford homeownership more quickly or it might delay their parents downsizing into a smaller home.
Also on the positive side of the ledger, home buyer activity generally is on the rise. In fact, mortgage applications to buy a home rose by 3% during the last week of August, according to the Mortgage Bankers Association’s seasonally adjusted index and they were stunningly 40% higher than the level of activity seen a year ago. It’s also likely that not all Gen Zers are hurting financially: current home buying activity is believed to be fueled, at least in some measure, by first-time home buyers.