Young Adults Headship Rates Hit New Lows


The most recent American Community Survey (ACS) data revealed that the worrying trend of rising shares of young adults living with parents, relatives or sharing house with roommates continued in 2017. Only 40% of young adults ages 25 to 34 lead their own household in 2017. In comparison, close to 46% of adults in this age group were household heads in 1990 and 2000. These new record low headship rates (which are shares of people who are household heads) translate into 2.5 million young adult households that are currently missing from the housing market.

Rather, 2017 became a year of record high shares (21.5%) of young adults living with parents or parents-in-law. In sharp contrast, less than 12% of 25-34 year olds lived with parents in 2000. Similarly, the share of young adults living with other relatives or sharing housing with roommates remained elevated in 2017. While only 4% percent of young adults ages 25 to 34 shared housing in 1990, that segment increased to 7.5% in 2017. In addition, the higher portion of young adults (5% in 2017 vs 3% in 1990) chose to live with relatives other than parents. As a result, more than a third of young adults ages 25-34 (this adds up to more than 15 million) now live with parents, relatives or sharing housing with nonrelatives.

It has been suggested that the young adults merely postpone the decision to lead their own households, and what was the typical household-forming behavior in your late 20s a decade or two ago now happens in your late 30s. Unfortunately, as of 2017, there is little evidence to support this hypothesis, as the household formation rates for the 35-44 year old group continued to decline as well.

In fact, the decrease in headship rates is a universal phenomenon with all age groups registering declines since 2000. However, the deterioration in headship rates is most pronounced for the youngest 25-34 age group and they remain accountable for the largest number of households that had never formed, fueling the rise in accessory dwelling units.

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2 replies

  1. In the Pacific NW, one of the largest demands for my “new construction” borrowers is the “Mother in law Quarters” or what some builders call a “home within a home”. These numbers show that demand is not going away anytime soon and the newest trend is homes with these types of accommodations not just for family- but for Airbnb to subsidize the cost of the home today.

    With a limited supply of these- it is important to get “creative” with buying a home and adding on an apartment over the garage or finished areas- always make sure that you connect with a Professional that understands potential lending AND potential issues with local ordinances as more and more Cities are restricting these.

  2. I wonder if the decline in headship rates has any relation to the effect that the Bankruptcy Abuse Prevention and Consumer Protection Act passed in 2005.

    This was the act that primarily made student loans (aside from private, non government backed) exempt from discharge.

    Basically, this same age group is graduating and entering the workforce with a significant drain on their spendable income.

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