More than half of young adults are living with one or both of their parents. Young adults are people between 18 and 29 years old. The number surpassed the previous peak during the Great Depression and is attributed to the effects of the COVID-19 pandemic. Some of these people would be homeowners now or soon. The trend is not good news for the housing market.
The data about young people living at home comes from the Pew Research Center, which used Census data to reach the 52% figure for July. The rise from 47% in February translates to an increase of 2.6 million to 26.6 million in that time. Almost one in five said they moved for financial reasons, which in many cases was job loss.
The median age of first time homebuyers is 33, according to the National Association of Realtors. The association points out that the age of this group has risen due to higher property prices and student debt. Recent figures on home prices show that they have continued to rise in many American markets. There is no evidence that the student loan situation has improved.
What will happen to the job opportunities for those who live at home? They will change for some as the spread of the disease slows or there is a vaccine. Each of those things could be a year off. Many people out of work will suffer the delay of a full year of earnings. That is a full year in which they cannot save money. In some cases, it is a full year when their student debt burden does not improve.
The part of the housing market that is likely to suffer is the low end, what is often called “affordable housing.”
The housing market is booming today. Part of this is the demand for homes outside big cities as people move away from the largest urban areas in a flight to safety. Another reason is the low mortgage rates. Neither of these will last, which means home demand will slip.
Many people who live at home today will not have the financial means to buy a home when they are 33. The demand for homes at the less expensive end of the market will suffer. In turn, a part of the housing market will be undermined.