More and more adults in every age category are staying or returning home. What will that mean for the future of housing?
The economic recovery hasn’t rescued Millennials who are stuck living at home with their parents. This much we know already. Since 2010, the share of adults ages 18 to 34 living at home has increased, owing to the slow speed of the recovery, diminished wages for low-skilled jobs, and the weight of debt for college students (in particular for those who do not graduate).
But it’s not just Millennials who are staying home. Gen X-ers are also moving back into their parents’ houses. And among older adults, too, the share of adults staying or moving home is on the rise. A recent paper from the Federal Reserve Bank of Kansas City shows that, in fact, the share of adults from every age bracket who are living with their parents has grown over the past 30 years.
“From 1980 to 2013, the share of young adults living with their parents more than doubled,” the paper reads. “Similarly, the share of intermediate-age adults living with their parents doubled from 1980 to 2013.”
Jordan Rappaport, a senior economist for the Kansas City Fed, uses these figures to explain the transformation in the multifamily housing market over the past 30 years. Rappaport’s paper explains that, in the short term, young adults are driving the market for new multifamily housing construction. Over the long term, however, retiring Baby Boomers will drive multifamily housing construction as they downsize.
In one sense, Rappaport’s buries the lede here. The rising share of “intermediate-age” adults who are moving back into their parents’ home (or failed to ever leave) is important, but the Gen-X demographic doesn’t get the same traction as the snake people. Yet the rise is sizable: 15 percent of adults ages 30–34 live with their parents—three times as many as did back in 1980.
Complementing the fact that more adults at all age levels are living at home: Fewer adults are getting married. At almost all age levels—right up until about 70—the share of adults that has never been married has swelled. Again, this rise is largest among Millennials, but the increase in never-married adults is also large among Gen X-ers and appreciable even among Baby Boomers.
What Rappaport has to say about the future of multifamily housing is just as important as his observations about headship and households. Here’s why: As Baby Boomers begin to retire and downsize, they will drive the construction of new multifamily housing. What that means, we don’t fully know yet. This new construction might not look much like the condos and apartments that developers are building today in order to chase young-adult households. It also might not look like the downsizing options preferred by seniors in the past.
“Will aging baby boomers prefer to live in the suburbs or the city?” Rappaport writes. “Will they prefer to remain in their present locations or move to a place with better weather or lower housing prices?”
So what happens if retiring Baby Boomers decide that they’d rather live in Brooklyn or San Jose (or any city with a lot to offer) than in the comfortable suburbs and retirement communities where the Greatest Generation lived out their golden years? If that’s the case, then Millennials—as they work to form their own households in cities with productive labor markets—may find themselves competing with their parents for housing.
Take this nightmare scenario for what it’s worth—it’s pure speculation. This fact remains: No matter what Baby Boomers do and how developers respond, it stands to be a big transformation. Already, the combination of stagnant wages and a lack of affordable housing near jobs is changing the way Americans live. Increasingly, they live at home.
What happens when Baby Boomers start selling those homes? The nation is looking over the edge of a retirement cliff, and we don’t know what’s on the other side.