Key Details:
- CNBC reports that 1 in 3 U.S. adults aged 18 to 34 live with their parents, with financial challenges like high living costs and economic shocks driving the trend.
- Millennials and Gen Z struggle with low savings, while some, like Victoria Franklin, save up to 50% of their income by living at home.
- Learn how this impacts personal finances and the broader economy, including $13,000 in lost annual consumer spending per young adult.
One in three young adults aged 18 to 34 still live with their parents. And it’s not because they’re blowing their income on lattes and avocado toast.
A CNBC article sheds light on the real reasons behind this trend—reasons that are painfully obvious to the ones holding off on moving out on their own. The cost of renting is high enough to make it difficult if not impossible for renters to save money toward a down payment.
For most of the Millennials and Gen Z staying under their parents’ roofs, it’s not about living the high life while letting their parents cover the household bills.
It boils down to the high cost of living—and the even higher cost of renting and buying a home.
Joanne Hsu, a research associate professor at the University of Michigan, has studied the trend, even co-authoring a 2015 study on “boomerang kids” for the Federal Reserve.
Those were the times coming [during] the Great Recession and coming out of the Great Recession, and there were a lot of media narratives at the time about millennials eating too much avocado toast to live on their own. What we found was that part of the reason we see this escalation of young adults not leaving the nest or returning to the nest is this idea that it was harder and harder for them to weather shocks.
Young Adults Living with Parents
According to U.S. Census Bureau data, about one in three young adults aged 18-34 live with their parents. That share surged during the COVID pandemic but has held steady in recent years since that spike.
The last recorded surge was between 2005 and 2015, coinciding with the Great Recession.
Young adults are most vulnerable to economic shocks such as the 2008 financial crisis, the Great Recession, and the pandemic.
Frequent use of the phrase, “In this economy…” is just one clue among many.
According to a 2024 Bank of America survey, more than half of Gen Z adults report not earning enough to live the life they want due to the high cost of living.
It’s not that moving out and creating a space of their own has lost its appeal. Many millennials and Gen Z adults lack a financial cushion (i.e., emergency savings) to soften the impact of unemployment or rising costs.
Case Study: Victoria Franklin
Victoria Franklin moved back into her mother’s house in 2019 after graduating from college.
The original plan was to move to a place of her own, closer to her job in New York City, in “six months or so,” instead of making her two-hour commute from the Jersey Shore.
The pandemic interrupted those plans. And when Victoria transitioned to a remote job in fall 2023, she chose to stay at her mother’s place to save money. In her interview with CNBC, she explained, “My mentality is why rent and give my money to someone else when I can start to own?”
Living with her mother enables her to save 40% to 50% of her income, a significant portion of which is going toward an eventual down payment on a house.
Ultimately, the ability to save for homeownership—which is significantly more challenging for today’s renters—took priority over moving out as early as possible to live independently.
Economic Impact of the Trend
While living with family has its benefits for the young adults who have (and choose) this option, it does have an impact on the overall economy by reducing household formation, as well as the average amount of consumer spending per individual adult.
According to a 2017 estimate by the Federal Reserve, young adults who move out of their family home spend roughly $13,000 more per year on housing, food, and transportation.
We do also have a situation that what is really good for an individual person or an individual family is not necessarily good for the entire macro economy. One of the big boosts to consumer spending is when people form households.
Related Financial Insights
It doesn’t help matters when high costs lead to debt accumulation, making it harder for young adults to afford to move out on their own.
More than one-quarter (28%) of credit card users are still paying for last year’s holiday debt. And two in five cardholders have maxed out (or nearly maxed out) a credit card.
On top of that, many shoppers plan to spend even more this holiday season, despite their current debt balance. In fairness, though, who doesn’t love to spoil their family and friends during the holidays? Memories beat lattes and avocado toast every time.
