Millennials Striking Out on Their Own

In 2013, 31 percent of 18- to 34-year-olds still lived with their parents. Prior to the housing crisis, however, that percentage stood at 27 percent. If the number of 18- to 34-year-olds who live with their parents returns to pre-recession levels over the next five years that could mean an extra 400,000 young adults leaving home each year.

“[A] normalization in the share of young adults living with their parents looks set to provide a boost to household formation, underpinning the recovery in housing starts,” says Ed Stansfield, chief property economist for Capital Economics. “But unless it is also accompanied by a marked loosening in lending criteria it is unlikely to trigger a new house price boom, as house price growth will be constrained by income growth.”

“The U.S. economy is now growing strongly, with real incomes rising rapidly and mortgage credit conditions loosening,” says Stansfield. “That means more young adults will have the means to strike out on their own.”

Source: “Is Household Formation Set for a Rebound?” HousingWire (March 12, 2015)