When the pandemic hit last year, young adults moved back in with their parents in a big way. Now the share of 18-to-29-year-olds living with parents and grandparents is back about where it was before COVID-19 arrived.
Still, you might think that 42.8 percent of 18-to-29-year-olds living in their childhood bedrooms or maybe the basement — which is the September percentage estimated by University of Maryland sociology professor Philip N. Cohen from Census Bureau data — sounds like a lot. And yes, by the standards of the six decades preceding the Great Recession, it really is. (One caution on all these statistics is that the Census Bureau wrestled with a rise in the share of people not responding to its surveys last year, which may have done some strange things to its numbers.)
Another way to track this phenomenon is simply by counting households.
The number of households grew rapidly in the U.S. in the decades after World War II, initially because the war and Great Depression had held back household formation, and then because the many, many baby boomers started entering adulthood and moving out on their own. Household formation slowed as the growth in the young-adult population slowed and then began declining in the 1990s. But even as members of the giant millennial generation started entering prime moving-out age, household formation kept dragging, with the 2010s delivering the lowest percentage growth in at least 160 years.
So what now? The pandemic return-to-the-nest has reversed, but there’s still a much higher share of young adults living at home than there was two decades ago.
A key reason why household growth was so slow before the pandemic was that young people couldn’t afford to move out on their own. With a 15.8 percent increase in rents nationwide over the past 12 months according to Apartment List and an 18.4 percent increase in home purchase prices according to Zillow, that’s still going to be the case for many.
The move to remote work over the course of the pandemic has had its own perverse effects. It made housing more affordable for those who could keep jobs in expensive cities while moving to cheaper housing markets, and at first it reduced prices in expensive cities. But it made those cheaper markets much less affordable for the non-remote workers already there, even as prices have mostly recovered in the expensive places.
Some of this should work itself out eventually, in part because it’s usually easier to add more housing in places like Spokane and Boise than in San Francisco or Seattle. But the case for a sustained housing boom over the next few years does seem to depend on there not being too much more of a boom in prices.
After that another significant development looms. According to the Census Bureau’s most recent projections, the number of Americans aged 25 through 34 will decline in the second half of this decade and after that grow extremely slowly for decades to come.
The most obvious takeaway here is that demand for housing will slow. But who would have predicted half a century ago that the percentage of young adults living with their parents would rise so much? Slower growth in the young adult population could, if it translates into slower growth in housing prices, conceivably enable a reversal of that rise.
Jus
tin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
