The coronavirus outbreak has resulted in an influx of people moving back in with their parents to help them get back on their feet. In fact, this accounts for 52% of young adults living with Mom and Dad, surpassing the previous peak during the Great Depression Era.
Economic hardships play a large role in giving up your pride and leaving your once sought after independence. The old routine in life stages would go from college to getting a job and finding your first apartment. Now, young adults skip the first step and decide to stay in their childhood room.
The number of young adults living with their parents spiked during the Great Recession Era almost a decade ago. The trend seemed to continue amidst all the shutdowns, needing refuge from the cruel world outside.
The comfort of getting your laundry done for you daily and a home cooked meal on the table sounds appealing. Not going to lie, that sounds nice. Millennials may have had no choice to move back in, but in the long run, it could potentially put them in a better spot financially than most.
Demand for Housing Can Decrease
Right now the housing market is on fire. Houses are flying off the shelves, selling for high prices with low interest rates. It’s a sellers market right now and doesn’t seem to be slowing down anytime soon.
However, inventory is low and may stay low for a while. Since the lockdowns, people have become more homebodies, preferring to stay inside than venture out to the bars or social events. This creates an even bigger value in homes and their prices.
But the increase in young adults moving back into their childhood homes can result in a lower demand for the houses. The market is hot right now, but it’s bound to slow down. When it does, we’ll see how many still want to stay home with Mom and Dad.
Laid Off Due To Pandemic
Some were forced to move back in with parents because of a lost job or economic hardships during these rough times. At one point, the unemployment rate hit an all time high, resulting in millions out of work. Having no job means bills can’t be paid and rent becomes impossible to pay.
Moving back in can be a smart move temporarily. You can save money during these times and build up financial stability. It’s a great plan that I’m sure some will do. A more common practice is to move back home after college, save up to afford your own place then move out.
A few young adults may view this move as a temporary measure until they can get back on their feet. It’s a way to find a new job, stock up their emergency fund and get back their life of independence.
The Move Back Home May Not Be Temporary
On the other side, this move back in with parents may not be temporary after all. 50% of young adults in college plan to move back in right after they finish. There are no plans to immediately leave on their own. In fact, 31% plan to move back in for at least two years.
So then what age will Millennials decide to move out on their own? 24% plan to live with parents until their late 20s, maybe even 30s. They may be delaying life events or hurting their dating life, but we could see an entirely new financial future for those living at home all those years. Funny enough, young adults find it embarrassing only at the age of 28 or older.
Dumping all your money into a crappy apartment or surviving month after month on your credit cards can be a thing of the past. Credit card debt can be one of the largest culprits in hindering others from reaching financial freedom. If young adults never become strangled by that debt, their future could be more promising than most.
Student Loan Debt Is Delaying Major Life Decisions
While they may be saving money, they are still burdened with student loan debt. While some consider this a “good debt”, it’s still debt and needs to be paid back. Living at home with your parents can give you the opportunity to pay that in full or at least make a dent in the total amount owed.
However, staying at home can delay other major life milestones such as buying your first home, saving for retirement or even getting married and having children. We can see a large push in age that hit these goals now.
I’ve already mentioned the concern with declining investment in house buying, but because of a delay in having children, we could see the birth rate percentages drop over the next few years.
Even retirement can be pushed from age 67 to in your 70s. If young adults are having a hard time finding a job or continue to not place a focus in their future, retirement accounts can take a hard blow.
We are entering different times now that could bring out a future none of us can predict. Moving back in with parents can help you prepare for the economic volatility we call life. What I’m more curious about is how this will shape everything else. The housing market especially will be interesting to see what changes. Maybe once the market slows down we’ll see more people moving out. Only time will tell what will happen.
