The Trend of Young Adults Residing with Parents is Climbing, Yet Homeownership Awaits Them

MINNEAPOLIS - Feb. 2, 2024 - PRLog -- The pattern of young adults opting to stay with their parents has seen an uptick after a two-year decline. However, this situation might not be as bleak for parents as it seems. The trend of returning to the parental home, often dubbed 'boomeranging,' might offer young adults a unique advantage in accumulating savings for a home purchase. Living with parents can ease the financial pressure for first-time homebuyers, who often have lower incomes but face fewer hurdles in saving for a down payment.

In 2023, statistics showed that 16% of individuals aged 25 to 34 were living with their parents. This figure reached a peak in 2020, with 17.8% of the same age group residing at home—the highest rate since 1960. From 1960 to 1980, the percentage of 25- to 34-year-olds living with parents was below 10%. The reasons for this trend vary, from the affordability crisis in housing to the flexibility afforded by remote work, all potentially aiding first-time buyers.

Percentage of Young Adults Aged 25 to 34 Living with Parents This return to the family home can provide financial benefits such as savings accumulation, debt reduction, and credit score improvements. For those with student loans, 6% reported that the pandemic facilitated early debt clearance or significant progress due to saved rent expenses by living with family. Some even managed to save enough for a house down payment.

Historically, first-time homebuyers primarily transitioned from renting to owning. In the current year, 71% of first-time buyers were renters before their purchase, but nearly a quarter had moved from a family member's home, showing a rise in direct transitions from family homes to homeownership since 2016. This is a significant increase from the 12% to 15% recorded between 1989 and 1995 when the National Association of Realtors (NAR) began tracking this data.

Previous Living Situations of Recent First-Time Buyers from 1989 to 2023 Approximately half of the first-time buyers who lived with family paid some form of rent, though it's unclear if these payments reflect market value or contributions towards utilities and groceries. The trend is more common among single men and women buyers. Those moving from family homes to ownership are generally younger, with a median age of 32, versus 36 for those who rented first.

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