With rent prices through the roof and the housing market scaring potential buyers away, more young adults in the US are choosing to live at home instead of venturing out on their own.
According to data from the US Census Bureau, nearly half of young Americans between the ages of 18 and 29 are not living on their own but with their parents.
In a Friday note, analysts from Morgan Stanley shared that the rate is the largest it’s been since the Great Depression era. Analysts estimate that close to 48% of young adults are living with their parents, similar to what was seen in the 1940s.
“We think the structural change in demographics might have been overlooked,” Morgan Stanley’s Edouard Aubin and a team of analysts wrote. “One of the key demographic trends in the US (and the broader Western market) has been the rising number of young adults living with their parents, driven by financial concerns (i.e. rental costs) as well as other sociological factors.”
In 2020 the percentage of young adults still living with their parents peaked near 49.5%, as the COVID-19 pandemic put Americans out of work and stopped many from leaving the nest, a Pew Research Center poll found at the time.
But while moving out may be bad for renters and homeowners looking to sell, it’s great for luxury retailers who can target young adults and their disposable income not being spent on necessities.
Morgan Stanley analysts noted this, saying that young adults staying home isn’t the only reason that luxury retailers are seeing a boom in business.
“This is, of course, not the only reason luxury-goods consumers are getting younger in the West (social media playing also an important part), but we see it as fundamentally positive for the industry,” the analysts wrote in the note.
Along with the price of moving out, higher prices for higher-education, delayed marriage, and more are playing a factor in young people staying at home, analysts shared.
A survey from PropertyManagement.com found that 51% of young adults view moving home as a way to “save money,” while 39% said they had to do it because rent was too expensive.
The poll also found that of those currently living with their parents, 55% moved back home within the last year, as inflation sits at a four-decade high and the price to live on your own has skyrocketed.
Even with 40% of millennials living at home reporting that they pay their parents rent, nearly half said they pay less than $500 per month. This is far below the national average for monthly rent, currently at $1,980, according to Rent.com.