For educators, the month of May is always an exciting time. We get to celebrate the most important part of our jobs: helping our students reach their goals. For many students across our region, the big goal this month is graduation from high school or college. And, many parents are celebrating the bittersweet milestone of seeing their children move out on their own for the first time.
To those parents for whom it is more bitter than sweet, I have some good news. For the rest of you, let’s just hope your family can buck the trend.
Young adults are moving back in with their parents in greater numbers than ever before.
During the Covid-19 pandemic, a record number of young adults moved back in with their parents. In July 2020, for the first time since the Great Depression, more than 50% of adults aged 18 to 29 lived with their parents. Many of these young adults reported relocating for pandemic-specific reasons—college campuses closing or loss of employment due to the pandemic economy. As one might expect, then, most of them were younger, traditional college students or entry-level workers.
But, even in a slightly older cohort of young adults between the ages of 25 and 34, the number of folks living with their parents was substantial: 18% in 2020.
Post-pandemic, that number has decreased only slightly, to 15.6% in 2022.
So, if they went home because of the pandemic, why aren’t they leaving now that colleges have reopened, the economy has rebounded, and health risks have subsided?
It turns out that the trend of young adults, ages 25 to 34, living with their parents longer or moving back in later predates the pandemic. The peak of 18% in 2020 was only 1% higher than in the previous year. Contrast this with 10% in 1984 and 10-12% throughout the 1990s and until 2008, when the number begins its steady increase to where we are today.
It seems we are looking at more of a Great Recession effect than a pandemic effect.
Regardless the cause, it is equally interesting to consider the effects of having so many young adults still living with their parents. And on this, the pros and cons are both strong. In fact, I first started thinking about writing on this topic in February, when I read the following two headlines in Fortune within a couple weeks of each other: On January 23, “Millennials and Gen Z living at home are a ‘train wreck’ thanks to their parents …” and on February 16, “Millennials’ decision to live with their parents has paid off…”
Which is it—are they train wrecks, or are their decisions paying off?
The “train wrecks” article quotes Dave Ramsey, who is concerned about the record high spending on designer accessories among this group. It cites a Morgan Stanley report that young adults (ages 18 to 29) are a growing market for luxury goods in the U.S. Ramsey’s colleague Jade Warsaw criticizes parents for allowing this sort of luxury spending by young adults living at home with debt and low-paying jobs.
On the other hand, the “decision… has paid off” article reports that 6% of individuals with student debt were able to make substantial progress toward it paying off because they moved home. Data from the National Association of Realtors suggests, too, that given soaring rent and housing prices, staying home has helped young adults save toward down payments on their own homes. In 1995, 15% of first-time homebuyers moved into their homes from a family member’s house. Today, that number is 27%.
Surely, the world is very different for today’s young adults than for generations past. College and housing are both far more expensive than before. In many ways, staying home is the financially savvy thing to do. Though, buying that Rolex watch may not be the best use of the money saved through that choice.
So, I don’t know; maybe both article titles are true. Maybe they’ll save enough to move out and then wreck the train with their luxury spending habits. Or maybe they’ll move out and figure it out like so many before them have done.
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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu. The views expressed in this article are those of the author and do not necessarily represent those of the College of Coastal Georgia.
Reg Murphy Center