Young adults are driving a boom in household growth
Young adults are driving a boom in household growth
Remember that old trope about how “kids today” are going to stay in their parents’ basements watching “Harry Potter” movies well into their 40s? Well, it could use some updating.
The number of households headed by 25 to 34-year-olds has grown by 300,000 per year from 2016 to 2021, according to a new analysis from Harvard’s Joint Center for Housing Studies. That’s compared to average annual growth of 45,000 households in the first half of the last decade.
Darien Pham is a 26-year-old California homeowner, which these days is like saying you’re a 26-year-old CEO or astronaut. It’s impressive, but Pham doesn’t lead with it when he goes on dates.
“Especially my age range, my generation, being a homeowner is kinda like a really hard thing to do,” Pham said. “And I don’t think any of us need a reminder of how hard it is.”
Pham spent most of his adult life living with his parents in the pricey San Francisco Bay Area, where it just didn’t make financial sense to rent. After saving up a bit and securing a VA loan, he pounced in fall 2020 on a 3 bed, 1 bath house in much cheaper Sacramento.
“It’s just like the logical step, right? I love my parents, but it’s time to kind of level up and move out,” he said.
You can only live with your parents for so long before people decide they need their own space, said Jenny Schuetz, a senior fellow at the Brookings Institution.
“And so the question was just when are people going to feel financially comfortable, that we start to see them move out and take up their own space,” Scheutz said.
She said early on in the pandemic, lots of young adults moved back in with their parents during lockdowns.
Since then, they’ve increasingly struck out on their own. That’s a trend that really began a few years before COVID when the labor market started heating up.
“So we had a very long period coming out of the Great Recession when young adults really just didn’t have jobs that would support an independent lifestyle,” Schuetz said. “As the economy got better, more of them were forming independent households and buying.”
Ironically, that glut of young adults forming new households has sent home prices and apartment rents soaring in recent years. Gen Z — those born after 1997 — are facing those same high housing costs millennials face.
But they’ve started their careers in a great labor market — one that now allows many jobs to be done remotely.
Sociologist Jessica Hardie at Hunter College in New York said being untethered from an office could encourage Gen Z to stay with mom and dad longer — or that it could make it easier to move out to cheaper housing markets.
“Either cities or just towns that are idyllic in some way, that aren’t necessarily an economic draw,” Hardie said.
Hardie says a lot will depend on whether we enter a severe recession soon. If so, that living in the basement trope could hit Gen Z too.
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