2 Million Missing Millennial Households

Filed in Economics, Homeownership, Housing Finance, Housing Trends by on February 26, 2016 28 Comments

youngcouplebuyersIt’s not just because mom knows how to make a mean meatloaf. The dramatic increase of young adults choosing to live with their parents is mostly due to stagnant income.

Since 2006, the 25- to 34-year-old age group showed almost no income growth, while the median income for older age groups grew by almost 11%. Waning wages for millennials has led to a significant drop in their household headship.

NAHB analysts have determined this shift away from financial independence and back into mom’s basement translates into approximately 2 million would-be home owners between the ages of 25 and 34 who are missing from the current housing market.

To make matters worse, the income gap for people in this age group has widened between the home owners and the nearly 9 million who live in their parents’ homes. This suggests the income requirements for young adults to buy (or even rent) a crash pad of their own have increased in recent years, further delaying household formations and significantly altering housing demand.

For more detailed analysis, go to EyeOnHousing.org. The complete NAHB report is available to the public as a courtesy of HousingEconomics.com.

Comments (28)

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  1. Joey hipps says:

    This is total garbage. The barrier to entry is just as low as it was in 2007 at the crash. Virtually no down payment is required to purchase. I agree with kids liking the ability to stay with their parents. The desire to live in a home they can afford the kids are spoiled and would rather live with their parents than live in a home within their income level.

    • NAHB Now says:

      Yes, there are many reasons why some young adults might prefer to live with their parents, but their desire to live independently and own a home remains very strong. A recent NAHB study – Housing Preferences of the Boomer Generation: How They Compare to Other Home Buyers – shows that 3 out of 4 adults age 35 or younger plan to buy a home within the next three years. However, the increasing number of them moving in with their parents suggests that economic factors continue to significantly inhibit and delay independent living.

    • Eric says:

      I don’t know where you live, or if you know a young person who has tried to get a loan recently, but not need anything down had not been my experience. I also know several others who have had trouble borrowing money. The banks have become a lot more locked down since the economic downturn.

  2. John Bitely says:

    Our current communities and local governments have also done a very “dis” service to these people by regulating development to a point that affordable entry level homes can not be built because affordable lots can not be created. We have also seen some pretty odd items in codes that are now required that add costs and also make affordable homes impossible to build.
    With 4% mortgages these people shouldn’t have to live in Mom and Dad’s basement to get by.
    It is sad when 25% of a new home is government regulation.
    This is from a Builder & Developer that works in one of the more affordable markets in the natation.

    • Paul says:

      Right on John. Unfortunately the facts you point out are overlooked by all the “government is good” folks who will no doubt criticize you as a greedy business owner who’s only out to make a profit, which is now seen as a sinful motivation.
      It’s clear why so many smaller builders and remodelers are tempted to throw in the towel. After all, who’s got the time or the resources to keep up with the endless regulations that just keep a comin’?

    • Curt Chastain says:

      In addition, student loan debt resulting from the ridiculous increase in the cost of college tuition is crippling young adults as they come of age. I could go on for hours….

      • I hate entitlement attitudes says:

        There are plenty of scholarships out there if they put in the effort to search and apply. I’m sick of hearing about student loan debt. College isn’t for everyone and it’s a privilege not a right.

        • Nicholas says:

          The only way to find a basic entry level job these days is to have a college degree. This is not the heyday that the baby boomers were spoiled with where a high school dropout could get a job at the local factory and support a home with a stay at home mom and 2 kids. No, they took advantage of that and as soon as they got into management positions, they sent all those jobs overseas to maximize profits.

    • Ivan Olin says:

      You are right, John, to place a large portion of the blame on government regulation! In 1990 we sold a 1400sf 3bed,2bath, 2car on a 10,000sf lot for $63,000. Now we pay more than that just for the lot and that’s because of government regulations restricting available land. The governments expanding redundant environmental requirements, excessive duplicitous reviews, and outrageous “impact, review & permit fees!” Back in 1962 we paid only $2 for the permit and the only inspections were for the building placement and electrical. Those homes are still standing, worth around $200,000 and probably healthier to live in with air flow in the walls, than the current over sealed homes. Now to buy a lot and pick up your building permit you pay $105,000 to $120,000 or more and add the price of building the actual home! Recent “environmental energy restrictions” have increased electrical costs $800-$1200 per home, and another $1600-$2000 in water heater requirements per home! (And with the low flow faucet, the continuous water heater won’t engage to heat the water to the sink!)

  3. Linda Kaplan says:

    Many of these young people cannot afford nor qualify for a mortgage. They have the debt left from their college loans.

  4. Ken Malinowski says:

    During the boom, many new homes were constructed. Now these homes are aging and are in need of updating. New homes today come at a premium which forced many people back to the resale market. I’ve noticed many first time home buyers do not have the desire to move in to a property that needs work. Income challenges, down payment challenges, student loan debt, property conditions etc., all contribute to this phenomenon. with. Demand for condos are coming back due to low maintenance, but lending challenges for those loans exists as well. My opinion only based on the clients I have the opportunity to speak with.

  5. Jan Neiges says:

    I would like to see additional info added to these stats as I feel another issue for this group is…do they know how to cut back on their spending which can help them live within their means? Do they know how to be financially frugal? Easy way to save is move back with parents hard way to save is learning how to live with less.

    • Jen says:

      Yes we know how to cut back on spending. I live in the city so I don’t have a car, I ride my bike to work and walk everywhere else. We’ve cut out cable and have a basic internet package. We try to eat out only on the weekends (if that) to help save on food costs. I live in a one bedroom apartment that I share with my fiance. We split the rent and bills down the middle. I have student loan payments on top of that. So with rent, bills, student loan payments I’m left with maybe 200-300 left over and that goes to food. Oh and my parents are both deceased. Having the luxury of moving back in with my parents is not an option for me. So as much as I’d love to move back home so that way I can save to put a down payment on a home of my own and pay down some of my student loans, I’m stuck living paycheck to paycheck renting a small apartment that I can just barely afford.

  6. BP says:

    Flat income for Millennials vs. 11% increase for older folks tells us that
    business doesn’t want to hire Millennials.
    National Education Association now educates everyone to go to college,
    so none of the kids know how to actually do anything.
    They have mega college debt and are unemployable.

  7. Mark Revard says:

    As a mortgage lender, we see more than enough income for this particular group to qualify when buying a new home, especially if applying as a marrited couple. There are several loan programs available for young home buyers with little or no downpayment required. As the father of a young college student I am also amazed at the starting income some of the kids are expecting/receiving coming out of college. We have seen some jobs paying as high as $60,000/year and more. In my opinion, this age class is concerned with having better homes than their income might allow, flexiblity and mobility as well as an underlying fear of the obligation due to the negative publicity homeownership withstood during the financial crisis. Let’s face it, owning a home is a big responisiblty and it is usually something that is considered once you begin a young family of your own which is also being pushed off to a certain extent.

  8. GT says:

    Obamacare has done little to encourage employers to hire more young adults for full-time employment due to the requirements placed on those who have 50 or more employees. Most employers are hiring millennials for “part-time” positions in order to avoid the added costs of Obamacare. No wonder these young adults have to live at home. Don’t get me started on how the Student Loan crisis is going to play out. Destroying their credit records and saddling them with years of debt. We need to educate young adults that there are “other” options than the “overpriced” 4 year degree. Entrepreneurship, affordable vocational training, apprenticeships, etc…… The educational landscape is changing rapidly with more on-line programs that hopefully will provide another affordable alternative for the future.

    • Curt says:

      Amen! We are really doing a disservice to our kids by funneling everyone toward college. There are many that would flourish by learning a trade, but for some reason there is a stigma attached to those that choose that path.

  9. Liz Nelson says:

    I think the biggest issues facing Millennials are student loan debt and low wages. The cost of tuition is crushing this age group. If we want Millennials to buy homes there needs to be more access to affordable housing. The answer is not to go back to no down payment for mortgages but to increase the “living” wages in the US.

    • Thomas says:

      This age group and many other groups in this country need to get over the fact that nobody owes the anything. Start their. You have to EARN a high living wage it’s not owed to you. Going forward, this age group is the hardest to employ simply because of their attitudes.

      • Carol Shute says:


      • Nicholas says:

        Generalizing an entire generation is nonsense. If anyone is entitled, it’s the baby boomers who rode off of the hard work and implemented programs of the greatest gen.

        • BP says:


          I moved out of my parents home at 16 and never looked back and I am a baby boomer.
          I did not ride anyone’s hard work, I did it myself. I employee quite a few people. Many of them are Millennials that actually are very motivated and understand hard work and will do well.
          They don’t whine they just get to it instead of pointing fingers. Try not to generalize a entire generation (Baby Boomers)

  10. E Anthony says:

    I believe this is why the quote “cookie cutter communities ” have done so well and are continuing to do well. These house are able to be built very inexpensive with generally more square footage.

  11. Leslie says:

    Many of the young adults in this demographic are saddled with student loan debt of substantial proportions. This is delaying their ability to live on their own.

  12. Kelly says:

    Student loan debt is a choice. Students are not “saddled” with it. They choose it. You can go to college without student loans, even if that means getting a normal job and going to school at night. It may take longer, but it’s worth it. The day we stop assuming student loans are practically a given is the day we start teaching our kids how to truly live within their means.

    • Paul says:

      Exactly right Kelly. All the dialog seems to suggest, “Gee, I woke up this morning with a big student loan payment.” I took out a student loan back in the stone age and distinctly remember signing a contract, within which I agreed to pay back the money borrowed to me. I had entered into this contract voluntarily and was more than willing to pay back all I had borrowed. Granted, tuition costs are obscene, but that’s a different issue.
      I encouraged my sons to learn a trade with the goal of owning their own business someday. Plumbing, concrete, framing – we’re crying for good people and there’s great opportunity to make a lot of money for those willing to break a sweat.

  13. Gene Myers says:

    The financial picture is complex if not complicated. As one becomes more proficient in their “craft”, as they advance within their company or even their business, or as even through inflation over the years they become more able to buy a “better” house (bigger, newer, better location, etc.) they leave a house that is desirable to someone else to “move up” and become the new owner a for such housings. Thus, they leave a house for someone else, thus creating a market for all and keeping prices stable.

    It is like the balance of nature. If this “chain” is broken at any point, the entire chain is useless to do it’s job. If the government, or any outside force, breaks this chain, this part of the economy falters. If many segments of the economy fail, the whole thing (our economy) will fail. Free enterprise must be allowed to function, without outside interference, if it is expected to work. The wise will profit and the stupid will remain stupid, as always.

    All parts of our economy works in a similar fashion, so become knowledgeable !

  14. Luigi Desak says:

    Rents for single-family homes have now risen slower than property prices. This comes as investors flood the market with homes for lease, but it also comes as fewer young adults generally a key market for rentals create homes of their own.

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