The number of young adults still living with their parents is at historic levels due to unaffordable housing costs

The recent increase in young adults living with their parents has reached levels not seen since the Great Depression, a trend detailed in a study by Wharton professor Susan Wachter and co-authors Arthur Acolin and Desen Lin. This shift is primarily attributed to worsening housing affordability, higher unemployment rates, and delays in marriage and child-rearing. Their research highlights that nearly half of those aged 18-29 now reside with their parents, a figure that has steadily grown from 27% in 1960 to 49% in 2021.

Wachter points out the significant rise in the rental burden as a key factor driving this trend. The average proportion of income spent on rent has jumped from 25% in 2000 to 40% currently, reflecting the deepening housing affordability crisis in the U.S. This scenario leaves many young adults with no choice but to live with their parents as an alternative to unaffordable rents and home prices.

The study, examining the period from 2000 to 2021, reveals that the decline in housing affordability is responsible for about a quarter of the 9 percentage point increase in young adults living with their parents. This issue is particularly pronounced in areas with the highest housing costs, where the connection between unaffordable housing and living with parents is strongest. According to Wachter, this has potentially prevented the formation of 2 million more households, mitigating the excess demand for housing amid a supply shortage.

Furthermore, the research underscores that the largest contributing factor to this living arrangement is the delay in marriage and having children, which accounts for most of the increase among Gen Z and Millennials. Despite rising household incomes and housing costs since 2021, the pace of rent and housing price increases continues to outstrip wage growth, exacerbating the affordability crisis for young adults.