Childhood homes are the new 'first apartment'
Young people are increasingly living with their parents instead of establishing their own households.
Millennials came of age watching shows like "Friends" and "New Girl" that often featured 20- and 30-somethings living in their first apartments. The characters' parents may have visited and participated in the story lines, but these young adults were living independently.
Yet it doesn't seem a coincidence to me that one newer show that caters to Generation Z, "Adults," has a group of friends living rent-free in one of the character's childhood home.
The reality is that 25- to 34-year-olds are increasingly living with their parents. In 2025, 49% of adults under 30 lived with a parent, up 12 percentage points from 2019, according to the Federal Reserve's Economic Well-Being of U.S. Households survey, published earlier this year.
The reasons aren't necessarily surprising. The jump comes as young people are graduating college with high levels of student debt and entering a weak entry-level job market, while Americans of all ages are struggling with the cost of housing.
Figure 1 below highlights how the share of young adult women and men living with their parents has evolved over the last 30 years. It shows large increases for both genders, with men continuing to be the more likely group to be residing in their parents' homes.
Understanding these increases is important. For one thing, young people who live with their parents are less likely to be married and they accumulate less wealth, especially housing wealth. If that doesn't worry you, this should: They are also less likely to have children, which could place further strain on programs like Social Security.
A recent issue brief I wrote for the Center for Retirement Research at Boston College explored what role economic changes wrought by the Great Recession might have had in driving the growth in young adults living in their parents' homes.
At first, it seemed odd to me that the Great Recession could trigger such an increase. While it caused a more than twofold increase in unemployment among those ages 25 to 34, things were back to normal by 2016. And while real wages initially dropped, they are back in positive territory, especially for women. If work and wages look similar to before the Great Recession, why wouldn't the rate of parental coresidence go back to normal, too?
What hasn't returned to pre-Great Recession levels are housing markets. To illustrate, Figure 2 below shows how fair market rents (a measure of rental rates used by the Department of Housing and Urban Development), the consumer-price index (CPI) and rental vacancy rates have evolved since 2007. Rents have grown faster than inflation, and the vacancy rate has fallen by 30%. It turns out that the Great Recession did some long-lasting damage to the rental-housing market.
Do these tough rental markets explain the increase in young adults living with their parents? The CRR brief found that it could - at least partially. The approach was simple: It did a statistical analysis to see if otherwise similar people - in terms of education, race, etc. - had different rates of parental living based on the rental market in their state of residence. It turns out that people in states with higher real rents and lower vacancy rates were significantly more likely to live with their parents. This relationship existed for both women and men.
With estimates of the relationship in hand, the brief then asked how the rate of living with one's parents would be if 2007 economic conditions existed today. While the brief looked at a variety of economic outcomes - including employment, wages and general inflation - looking at rental conditions alone can help isolate how housing markets spill over into people's everyday lives. It turns out that if 2007 rental conditions prevailed today, parental living would be 1.5% lower for women and 2.1% lower for men. While this decline is hardly trivial, it's worth noting that in 2007, the actual rates were 4.9 and 5.9 percentage points lower for women and men, respectively. So factors other than rental markets seem to be playing a role, too.
Determining these factors was mostly beyond the scope of my brief - but it never hurts to speculate a bit.
One possibility is that the rise in these living arrangements is just a side effect of another jarring trend: rapidly declining marriage and fertility rates. If not married with kids, living with parents could be a decent option. The problem is that these trends are not very well understood, either. For instance, it could be that the explosion of digital technologies gives today's young adults alternatives to in-person relationships.
The other possibility is that the rise in living with parents is somehow a cause, not a side effect, of declining marriage and fertility. For example, perhaps increased closeness to parents facilitated by smartphones or gentler parenting styles leads young adults in their 20s and early 30s to be more comfortable living with their folks. More research is needed.
Finding other causes is important, since fixing housing markets can only get us part of the way there. While the trope of young adults living with their parents has been played for laughs for years - the movie "Failure to Launch" came out in 2006 - the consequences are real. For the individual, less wealth; for society, fewer new families.
As the first members of Gen Z hit 30, this topic merits attention.
-Geoffrey Sanzenbacher
Comments