Why Millennials Can’t Live with Their Parents Forever

millennials living at home blog post

In the past several years, the amount of people age 25-34 who live with their parents has increased to a current record high of 19%. There are many factors that influence this new trend, and surprisingly not all of them pertain to economics. In fact, most of the effects are due to new social norms instead.

Recently, millennials have had to deal with the financial struggles of paying off massive college loans ($1.4 trillion of debt), finding jobs in a recovering job market, and buying a house in a market where prices have spiked 21% since 2012. These factors play an important role in why more millennials live with their parents today than millennials who live with a significant other. However, these financial struggles may not be the only influence on their decisions to live at home longer.

living at home:economic expansion gaph

This graph shows the opposite of what one would think about the correlation between young adults living at home and economic success. As shown, the highest percentage increases of young adults living with their parents have occurred during times of economic expansion. This goes to show that the recent record high levels of millennials living at home is due to more than just their financial struggles, and interestingly is due to changing social norms.

A study conducted by the Pew Research Center showed that while the economy improved after the recent recession, there was actually an increased amount of millennials who opted to continue living at home. In addition to this study, the Pew Research Center found that compared to past generations, millennials have a tighter bond with their parents. Through these findings, it shows that economic struggles alone are not the only reason for more millenials living at home. It is the comfort and ease of mind that millennials feel at home as to why they are delaying this departure of leaving “the nest”.

Some fear that by more millenials living at home longer, they will have less incentive to search for as high paying of jobs as otherwise. This means that their salaries are lower and as a result, Social Security funds will not increase sufficiently enough to support the retirement of future generations. Additionally, the amount of consumption will decline as young adults have lower salaries and are sharing many purchased goods with their parents. These increases in millennials living with their parents may not be completely due to harsh economic conditions, but if it continues, they will create greater economic issues.

Sources:
http://www.cnbc.com/2017/04/20/scariest-economic-indicator-more-millennials-living-home-commentary.html

http://bigstory.ap.org/article/a0525a0571c74029a723b916ed70b45f/goodbye-empty-nest-millennials-staying-longer-parents

http://www.motherjones.com/kevin-drum/2016/05/why-are-so-many-millennials-still-living-home

https://www.stlouisfed.org/on-the-economy/2015/october/millennials-living-home-student-debt-housing-labor

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7 thoughts on “Why Millennials Can’t Live with Their Parents Forever

  1. Victor Matheson

    Interesting. I would have guessed living with one’s parents would be much more strongly correlated with the business cycle. I do wonder if you added median home price into the equation whether that would explain a bunch of trend that economic conditions don’t.

    Reply
  2. lrtamburello

    This post provides a unique perspective on millennials living with their parents. Perhaps a change in “taste and preferences” plays a large role in this living at home decision. Increasing debt and housing prices certainly effect this decision.

    Reply
  3. kevinlynch123

    This is interesting analysis as to why more millennials are living at home with their parents. However, I would question whether or not living at home would truly lower the incentive to search for high paying jobs. It’s certainly true that this trend would lower consumption because millennials can share goods with their parents, but it could also create the opportunity for greater investment if millennials have more disposable income.
    -Kevin Lynch

    Reply
  4. willdagostino

    Great post! I agree with Kevin. I think this gives millennials the chance to save for a couple of years before investing in a home or apartment. I know a few millennials who lived with their parents for one or two years with great jobs. One of them was able to purchase their own car due to how much they saved. This also relates to my post regarding how millennials are entering the workforce with much fewer assets and lower starting incomes than their parents did. This could also influence the living at home trend.

    -Will D’Agostino

    Reply
  5. cnhend19

    This is an interesting topic. I am surprised that the possibility of living at home would be a disincentive to find a higher paying job. I would have thought that living at home would be a type of “last resort” — one that would pressure someone to look for a better job / higher income.

    Reply
  6. tswats18

    I did not realize this at all but I do think lots of it makes sense. I understand that initially it makes sense for lots of millennials to live with their parents because the increased amount of people that have to pay high student loans. Also, it does seem that society is much more accepting of this situation than it has been in the past, largely do to its understanding of what financial struggles younger people face. However, I would be curious to see what amount of this 19% is closer to 25 than 34. I think it would be much more alarming if a higher percentage of the 19% was not closer to 25, because this might support the prediction that millennials have less incentive to look for a higher paying job because they are comfortable with just living with their parents.

    Reply
  7. katiepiro

    I wasn’t aware of the social aspects of the increase in the amount of millennials living at home. I’m sure that the expansion in the economy had an effect on rising tuition costs which also contributes to the decision of young adults to stay at home. This is an interesting take on the current problem.

    Reply

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