Pent Up Demand?

  • In 2010, there were more than 70 million young adults aged 18 to 34 living in the US.  The share of adults under age 35 living at home, especially among those aged 25 to 34, is at the highest level since 1981.  More than 30 percent of those 18 to 34 lived with parents[1]; the historical average is under 28 percent.  The share was 13.4 percent among those aged 25 to 34.  The historical average for this group is only 11.5 percent.
  • At the same time, a little more than 25 million households were headed by those under age 35.  This group has a homeownership rate of just under 40 percent.  Breaking it down further, households headed by those aged 25 to 34 have a homeownership rate of 45.2 percent compared to 23.3 percent for those under 25.
  • The ratio between the number of households headed by 24 to 35 year-olds and the number of 24 to 35-year olds living at home in 2010 (46.9 percent) was the lowest since 1981.  For the ratio to return to the historical average (48.3 percent) assuming no population growth, nearly 600,000 households would be formed.  With a home ownership rate of more than 45 percent among this group, these households translate into 270,000 owner households.  It’s worth noting that the current home ownership rate among this group is slightly below the historic average.
  • Data from the 2010 Profile of Home Buyers and Sellers show that first-time buyers were more likely to have lived with parents, relatives, or friends than in the past.  Twenty-one percent reported that living arrangement in 2010 compared to a historic average of 18 percent.

[1] Note:  In CPS data, unmarried college students living in dormitories are counted as living in their parent(s) home.

Reprint from NAR Research, January 18, 2011.