Why Many Young Adults Are Living With Their Parents
Younger adults have faced criticism over the past decade for taking longer than older generations to buy their first homes. However, there are many factors at play that impact their decision. For example, last year the pandemic led to a sharp increase in young adults living with parents.
In 2020, the number of young adults living with their parents rose to over 50% (the first time it had gotten that high since the Great Depression), according to Pews Research. Before the pandemic, the percentage averaged around 47%.
This year, the percentage of young adults living with their parents remains in flux as the nation continues to grapple with COVID-19 variants and issues surrounding vaccine adoption. Here’s a look at how the current economic, public health, and housing climate is impacting the homebuying decisions for young adults.
The Cost of Housing
Despite the lowest interest rates in decades, home prices have risen drastically. Housing prices have been setting new records for a year. According to U.S. News & World Report, July 2021 saw a 19.7% increase compared to the year before. Homes located within city limits have seen even higher increases. For example, homes in Phoenix saw a 32.4% increase, which was higher than San Diego’s 27.8% increase in house prices.
Renting Is Equally Expensive
While it may seem like the perfect time to rent, rental prices have also risen. In August 2021, CNBC reported that the national median rent had already increased by 11.4% for the first six months of the year. You might be surprised that big cities aren’t the ones driving the increase in rents. Instead, mid-size cities have seen rents climb higher. The upward trend may have resulted from a mass migration out of the cities during 2020.
While eviction bans put into place last year made it possible for those struggling to remain in their homes, there were those who wanted to maintain a clean slate. The easiest way to do that was to return home and take advantage of the cost benefits of multi-generational living.
Wages Not Keeping Pace
Ironically, the housing shortage occurred at the same time as a record-high labor shortage. In response, companies have gone above and beyond to attract workers by bumping up wages. However, some workers say it’s too little too late. And in some cases, even the higher salaries aren’t in line with the current cost of living.
There’s Help For Those Who Want To Buy
Despite the challenges, young adults living with parents can still realize their dream of homeownership. At UW Funding, we’re committed to helping more Californians create independence by buying a home. Our team works closely with aspiring buyers so you can review and prepare your finances for mortgage qualification. Contact us for a quote to get started.