Although the recession disrupted household creation by “millennials” (those born between 1985 to 2004), a new study suggests the generation will soon start to create households in large, influential numbers.
Young adults, so-called “millennials,” have been pushed by the recession to live with their parents into adulthood but they really want to move out.
This shift by the millennial generation could form 24M new households by 2025, likely transforming the housing market.
Three main factors have been holding them back from moving out,
1. A weak job market for recent graduates;
2. High debt from student loans and;
3. Tightened lending standards
The leading edge of this closely watched generation will soon reach their 30s, the age range in which household formation ramps up. As a result, the number of households in that age group will rise by 2.7M in the next decade.
Some 11M recent grads were living with a parent in 2012. The homeownership rate for those under age 35 was 36% in the first three months of 2014, down from a high of 43% in 2005.
In an analysis of recent Census Bureau data, the share of 18 to 24 year olds living with parents fell last year for the first time since 2005. It translates to 300,000 young adults looking for alternative living arrangements.
Don’t look for a mass exodus from parents homes. But rather look for a trickle out of their parents’ nest creating a steady, slow recovery.