It was a phenomenon 12 years ago that ended with a
huge decline in homeownership among Millennials, and now it is happening, for the
same reason to Gen Zas a huge surge in unemployment sends young adults home to
live with their parents.
The root cause this time, of course, is vastly
different; a deadly virus rather than a general slowdown in the economy coupled
with mortgage defaults and delinquency.

The
Pew Research Center has found that the share of 18-
to 29-year-olds living with their parents now constitutes a majority of that
age group, surpassing the share in the Great Recession and even topping the previous
peak during the Great Depression.

Three Pew Center analysts, Richard Fry, Jeffrey S.
Passel, and D’Vera Cohn found, using Census Bureau data, that in July 26.6
million  or 52 percent of young adults  resided with one or both of their parents, up from 24
million or 47 percent in February. The increase was evident for all major
racial and ethnic groups, men and women, and metropolitan and rural residents,
as well as in all four main census regions. Growth was sharpest among the youngest
age group, ages 18 to 24, and White young adults.

 

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Prior to the
coronavirus outbreak the highest documented number of parent-housed young
adults was in the 1940 census at 48 percent. The peak may have been higher
during the worst of the Great Depression in the 1930s, but there is no reliable
data. The share declined in both the 1950 and 1960 Census before rising again. The
monthly share has been about 50 percent since April
, maintaining that high a
level for the first time since data from the Current Population Survey (CPS) became
available in 1976.

The
share of adult children who live in their own homes along with their parents,
or in homes headed by other family members has been relatively stable for the
past decade, but 88 percent of those living with their parents do so in their
parents’ home, and this group accounts for the growth the Pew Center found.

 

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The authors say that young adults
have been particularly hard hit by the pandemic and subsequent economic
downturn and are more likely to move than other age groups. About one-in-ten
young adults (9 percent) told a Pew Center survey that they relocated
temporarily or permanently due to COVID-19 and about the same share had someone
move into their household. Among all adults who moved due to the pandemic, 23
percent said this was primarily because their college campus had closed, and 18
percent said it was due to job loss or other financial reasons.

The youngest adults (ages 18 to 24)
accounted for most of the growth in the number of 18- to 29-year-olds living
with their parents from February to July; 2.1 million of the 2.6 million
increase was attributable to them. Sixty-three percent of this age group already
lived with their parents before the pandemic, but the share grew to 71 percent
in July.

The pattern is consistent with
employment losses
since February. The youngest adults have been more likely
than other age groups to lose their jobs or have their pay cut. The share of
16- to 24-year-olds who are neither in school nor employed more than doubled
from February (11 percent) to June (28 percent) due to the pandemic and
consequent economic downturn.

The Northeast remained the region
with the largest share
of young adults living at home (57 percent), but growth
was sharpest in the South, where the total rose by more than a million and the
share increased from 46 percent to 52 percent.

White young adults have historically
been less likely than their Asian, Black, and Hispanic counterparts to live
with their parents, but that gap has narrowed since February. Whites accounted
for 68 percent of the increase.  In July 58
percent of Hispanic, 55 percent of Black and 52 percent of Asian young adults were
living with their parents.

 

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It is worth noting that the CPS
numbers count unmarried students living in college dorms as living in their
family home. Thus, the increase those living with parents this year are not due
to closure of those dorms last spring.

There is, however, a seasonal
pattern. The share of young adults living with their parents tends to rise
slightly in the summer.
In 2019, for example, that share rose by less than 2
percentage points in July compared with February. But this year, the increase
was more than 5 points.

The
authors stress that these new living arrangements don’t just affect young adults
and their families, but the entire economy given the importance of the housing
market to overall economic growth. Even before the outbreak, the household
growth trailed population growth, in part because people were moving in with
others. Slower household growth could mean less demand for housing and household
goods. There also may be a decline in the number of renters and homeowners, and
in overall housing activity. Between February and July 2020, the number of
households headed by an 18- to 29-year-old declined by 1.9 million, or 12
percent to 13.9 million.

By Jann Swanson , dated 2020-09-14 09:15:47

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Courtesy of Mortgage News Daily

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