Living at Home as an Investment


Even with improving economic conditions, a record number of Millennials live with their parents. According to a recent study published by the Pew Institute, the share of the U.S. population aged 18 to 31 living in their parent’s home increased to 36 percent or a record 21.6 million young adults in 2012. The share of the same age group living with parents prior to the start of the Great Recession was 32 percent and 34 percent at the end of the Great Recession in 2009.

This growth has largely been attributed to three factors; declining employment, increasing college enrollment, and declining marriage. And these changes are part of an overall increase in the establishment of multigenerational households.

For a generation coming of age during the worst economic crisis since the Great Depression, this may appear to be more bad news. However, a closer look shows the increase is partly due to more investment in human capital. Facing reduced employment opportunities and poor earning potential without a college degree, in 2012 a record 38.9 percent of individuals aged 18 to 24 enrolled in college.


College enrollment increases the number of those living with parents in two ways, one economic and one technical. The economic is choosing to live at home while pursuing a degree. The technical is through the fact that in the data college students are often counted as living at home.* Dormitory-living is not counted as a distinct independent household.

The increase in college enrollment has significant implications on the future economic well-being of Millennials. On the one hand, those with a college degree have a much higher earning potential than those without a college degree. On the other hand, the cost of attending college is increasing and according to the Chronicle of Higher Education nearly 60 percent of all students borrow annually to help cover costs. Additionally research from the Federal Reserve Bank of New York shows year-after-year increases in loan delinquency and average student debt per borrower.

The economic well-being of those 18 to 31 is of particular interest as these individuals represent future consumers of housing. At some point, many of the 21.6 million Millennials living at home will move out. Past trends suggest most of these new households will be renters first.

Nonetheless, the housing choices they make will be influenced by policy decision made today. Those policy decisions will need to take into account lessons from the housing market crisis and the economic realities of a generation coming of age during the Great Recession. Fundamentally, policies that make it more difficult to purchase a home with a mortgage – via housing finance or tax reform – will have distinct impacts on Millennials.

* Data footnote: An adult is considered to be “living at home” or “living with parents” on the basis of the adult’s relationship to the head of the household. The Census defines individuals who are temporarily absent as household members even though they are not present in the household during the survey week. College students compose the bulk of such absent household members.

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