About 1 in 3 Americans
between
18 and 34 years old live with their parents. And while you
may have heard more about this recently, this trend isn't
new. Between 2005 and 2015, the
share just grew very steeply

over this ten-year period. Since then, it's been fairly
stable. There was an uptick, of
course, during the pandemic. In the wake of the pandemic,
those rates of parental co-residence are now about
where they were right before.

Part of the reason we see
this escalation of young adults not leaving the nest
or returning to the nest, is this idea that it was harder
and harder for them to weather shocks? Nearly 30% of Gen Z
said they
would like to save but don't

make enough money. And
roughly 2 in 5 millennials and Gen Z adults feel it's harder
to build financial wealth now than when their parents were
their age because of the economy. 27-year-old Victoria
Franklin has been living with

her mother in New Jersey
since she graduated college in 2019. I saw all of the money
that I
was saving, and I thought maybe I should stay home for
a little bit, and I didn't feel an urgency to move out.

Not everyone is enthusiastic
about this trend. You guys are making six
figures together. You can't tell me you can't
afford a house. They just don't want to spend
their money. 36% of Americans said in a
2022 survey that more young

Adults living with their
parents is bad for society. So here's why young Americans
are choosing to live with their parents, and what the
implications are for the U.S. economy. My name is Victoria
Franklin.

I am 27 years old and I live
in my childhood home with my mother and my boyfriend. Victoria graduated from the
University of Miami in 2019, and moved in with her mom
when she was looking for a job. After I saw the cost of
living
and things like that after I

graduated, that maybe I'd be
home for about a year. More than half of Gen Z
adults
say they don't make enough money to live the life they
want, due to the high cost of living. I ended up bartending
and
waitressing until October,

where I got my first offer,
so it did take a little bit longer than I expected. 
Currently, I live at the Jersey Shore and I was commuting into New York City, which takes
about two hours each way. And I thought, you know, in
six months or so, I'll move

into the city, be closer to
the job. And the pandemic threw a
wrench in those plans. Victoria now works a fully
remote job, which she says she probably wouldn't have if it
weren't for the pandemic.

Without a commute to worry
about, she was able to stay at her mom's for longer. It's a
lot harder for young
people today to save up for markers of the American Dream
than it was for previous generations. Part of the
reason we see this escalation

of young adults not leaving
the nest or returning to the nest, is this idea that it
was harder and harder for them to weather shocks. So, for example, if they
suffered a layoff or they suffered some sort of health
shock, or they got in a car

accident, if they didn't have
any additional credit to weather that shock, they
would end up moving back home. The financial stability of
young adults, their ability to pay for things if they got
into an emergency, was one of

the big factors influencing
whether or not they were living on their own or living
with their parents. A significant number of Gen Z
adults and millennials lack emergency savings. In fact, 46% of millennials
and 32% of Gen Z have more

credit card debt than
emergency savings. This can have ramifications
for setting up a financial future. Roughly 1 in 4 Gen Z
adults say housing costs are one of the biggest
challenges to financial success. The prices of homes
have
escalated over the last few

decades much faster than
actual incomes. So it is actually much harder
for a millennial or a Gen Z to save up for a down payment to
buy a home. And that's something that
bears out in the data.

The pandemic did have a lot
to
do with it. I saw how much I was saving
and I was like, hmm, maybe I shouldn't be paying, you
know, upwards of $3,000 a month and making somebody
else richer when I could stay

at home and save that money
and spend it on what I want to spend it. Between my job
and my bartending and waitressing, I make anywhere
from $85,000 to $95,000 a year. I would say about 40 to 50%
of my salary is going right

into savings. My mentality
is, why rent and give my money to someone else when I can
start to own. So a big chunk of that money
is going to go towards a down payment on a house. Young
adults ages 25 to 34, in
high cost of living areas, are

more likely to live with
their parents. Nearly 26% of young adults in
New Jersey were living with at least one of their parents in
2022. The median household income
in Oceanport, New Jersey, where the Franklins live, was
nearly $133,000 in 2022, while

the median value of a home in
the region was around $644,000. My dad built this house for
$350,000 and was making probably $10,000 to $15,000 less
than I was. My mom wasn't working at the
time, and they were able to

afford a $350,000 house on a
$70,000 a year salary with a son. And that is just that's
not even the American dream anymore. That's not even
possible. My aunt, who I fight

with all the time, is always
saying how you have to give somewhere, right? And my
cousin said something to her the other day and said, we're
giving everywhere. We don't get property, we
don't get good school systems.

Whatever we're trading off is
too much to trade off. Victoria had brought up some
conflict with her aunt a few times. Oh, this is my Aunt
Judy. So I asked Aunt Judy to come
on over and talk to us.

I talked about how much we
fight about millennials living at home and how you always
say, well, you have to sacrifice something. But how much we're
sacrificing. We don't get like a big
property, or we don't get like

a nice house or it's not in a
good school system. You have to start somewhere. You have to start anywhere. Just start your portfolio, is
what I told you. I don't care what it is. You don't have to live in
Oceanport your first time.

No, but you were able to live
in Oceanport the first time. Okay, I guess it was
different
times. Gen X and Baby boomers may
have a tougher time understanding what young
adults are going through today

because they enjoyed until
the pandemic recession hit, you know, a solid almost 15
years of uninterrupted economic expansion. Baby
boomers, Gen X, they
weathered many economic downturns, including major
recessions.

But I think the big
difference is that when they were starting to form their
own households and starting to accumulate wealth, housing
and higher ed were both more affordable relative to their
incomes than they are now. When I started out, I was
making $35,000 a year.

That was nothing. And he was making $35,000 a year. You guys are making six figures together. You can't tell me you can't afford a house. You just don't want to spend *your* money.

Told you. Is this what you wanted? What was my first house? 250, maybe 270? That doesn't exist anymore. Where am I finding a $270,000 house? I'm not making $35,000 a year.

Combined, we made 70. In 1995. $70,000 was the equivalent of $145,000 today. Oh, yeah, look at that. See? We do also have a situation that what is really good for

an individual person or an individual family is not necessarily good for the entire macro economy. The Federal Reserve estimates in a 2019 paper that young adults who move out of their parents' house would spend around $13,000 more per year on things such as housing,

food and transportation. One of the big boosts to consumer spending is when people form households. Whether you're a renter or a buyer, you need to furnish that house. You need to fix things up in the home, to make

it livable. You end up spending a lot of money during that time. So if the pace of household formation slows down, and that's going to slow down the pace of consumer spending, and that will produce a drag on the economy.

Another issue is that there
aren't enough affordable properties in popular areas
for younger people who are in entry-level jobs and making
less money. Any sort of
housing policy needs to be multi-pronged. Are there
homes that are at the price

point of these prospective
home buyers? What can we do to increase
the housing supply? What can we do to build? What can we do to help elder
Americans, to help them downsize and move into more
right-sized homes that will

open up larger homes for young
families. So I think one alone is not
really going to do it. We've got to look both at
demand as well as supply. The other major factor here
is
how much student loan debt

young Americans have. 59% of
U.S. adults say they've delayed
financial milestones because of their student debt. I do
have a student loan
payment. It's about $480 a month, so that's my largest
expense.

The liability could be worse
for Black borrowers, who tend to have higher than average
student loan debt and less wealth than white
counterparts. Black and Hispanic
respondents were
more likely to say the debt was holding them back from
reaching financial milestones.

Less than half of white
respondents said the same. The amount of debt young
adults held also rose substantially between 2005
and 2014 – during that period of strong escalation in that
cohort living with their

parents. Aggregate student
loans are
such an enormous part of the economy now. And that's not a
reflection of younger people making bad choices with their
education. It's really a consequence, in
large part due to the fact

that there's less public
funding, and going to college just is more expensive, which
makes it even harder for even those college grads who are
hopefully earning more money as a result of their college
degrees. Student loan debt by itself
can't explain the phenomenon,

especially considering so
many European countries with much less student loan debt
have higher rates of young adults living with their
parents. 24 out of 29 European countries had more 18 to 34
year olds living with their parents in 2021 than the U.S.

It was over 70% in Italy,
Portugal, Greece, Serbia and Croatia. My boyfriend is
Brazilian, and multigenerational homes are very common in almost
everywhere else in the world except in the United States.

So I'm just taking a page of
their playbook. The Americans are probably
the
only people that they're not multigenerational in one
house, and I don't have a problem with it. I mean, I
think it's kind of nice.

Why do we have to be so cold
to push everybody out? You know there are a lot of
cultures out there in which it is normal to live with your
parents until you get married, and I don't think there's
necessarily an economic

explanation for that. The Franklins would say in
the
U.S. it is the economy, but
Victoria's mom is kind of okay with it. Unfortunately, it is
the
economy and the world that we live in that just doesn't
allow them to go live a

comfortable life. So with
them living here was no big deal. It's not really a
problem. They're saving their money.
Eventually they'll buy a house and that works.

Why So Many Young Adults Are Still Living With Their Parents In The U.S.

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Rising Trend of Young Adults Living with Parents

Approximately one-third of Americans aged 18-34 live with their parents.

This trend significantly increased between 2005 and 2015 and remained relatively stable afterward, with a temporary rise during the pandemic.

Difficulties in weathering financial shocks contribute to this trend.

Many young adults feel it's harder to build wealth now than previous generations.

Victoria Franklin, a 27-year-old, lives with her mother after graduating college in 2019 due to high living costs and saving goals.

Some view this trend negatively, believing it's detrimental to society.

Victoria's initial plan to live at home for a year extended due to job searching and the pandemic.

High cost of living and job searching delays influenced her living situation.

It's harder for young people to save for milestones of the American Dream compared to previous generations.

Inability to weather financial shocks leads many to return home.

Lack of emergency savings is a significant factor influencing living arrangements.

Many millennials and Gen Z have more credit card debt than emergency savings.

High housing costs are a major challenge to financial success for young adults.

Victoria's decision to stay home was influenced by the high cost of renting versus saving money.

Young adults moving out spend significantly more annually on housing, food, and transportation, boosting consumer spending.

Slower household formation slows consumer spending and negatively impacts the economy.

Lack of affordable housing in desirable areas exacerbates the issue.

High student loan debt significantly impacts young adults' financial milestones.

International Comparison and Cultural Factors

Many European countries have higher rates of young adults living with parents than the U.S., despite lower student loan debt.

Multigenerational households are common in many cultures globally.

Cultural norms, not just economic factors, influence living arrangements.