Fewer young adults forming households
Fewer young adults are forming households, with many of them opting instead to live with their parents. In fact, a new report from Pew Research Center found that for the first time in the modern era a higher share of adults age 18-34 are living with parents rather than living with partners or spouses.
Daniel McCue, a senior research associate at The Joint Center for Housing Studies at Harvard University said the ongoing trend is increasingly meaningful to housing markets. Contrary to what might be surmised, household growth has been accelerating since 2012, and did so again in 2015 according to the Census Bureau's Housing Vacancy Survey.
McCue said the explanation lies in the shifting age distribution of millennials, noting the rate of living with parents drops sharply across the age spectrum. While around 50 percent of adults age 20-24 live with parents, it drops down to 15 percent for the 30-34-year-old group. Notably, over the past decade, the majority of population growth for young adults was skewed towards the younger side of the 18-34 year old cohort as the millennials replaced the smaller, Gen-X population in the 20-24 and 24-29 year old groups.
JCHS researchers report that over the next decade, the aging of the millennial generation will shift the bulk of population growth from the 20-24 and 24-29 age groups to the 30-34, 35-39 and 40-44 year old age groups. "At these older age groups, changes in rates of living with parents and overall household headship have been much more moderate and remain closer o recent historical levels."
"This all suggests that future expected population growth in the 30-44 year old age groups will translate more directly into household growth over the next decade, even if living with parents continues to remain high for 20-somethings," McCue reported. He believes the pick-up in annual household growth levels since 2012 as reported by the Housing Vacancy Survey is a sign that this has begun.