More grown children finally leaving the nest
New data suggest the economy has recovered to the point that more young adults are moving out.
During last year's Republican National Convention, vice presidential candidate Paul Ryan summed up some stresses and frustrations of young Americans trying to leave the family nest -- but unable to find jobs in the economic downturn.
"College graduates should not have to live out their 20s in their childhood bedrooms, staring up at fading Obama posters and wondering when they can move out and get going with life," he said.
But new data suggest the economy is recovering enough that young people who returned home -- or never left, because of tight finances -- are now setting up their own households with roommates, other family members or significant others.
Reuters reports that creeping economic growth and a thawing labor market have led to a two-year uptick in the number of individuals and families moving into their own homes.
"The rise in household formation bodes well for the housing recovery," Guy Berger, an economist with RBS, told Reuters. "Instead of having too many houses, we are turning to a situation where there aren't enough."
And while U.S. home ownership rates remain at recession levels, rising demand from a stronger rental market is apparently prompting a rise in construction of apartment buildings.
"We are going to see more recovery in the rental market, in the very short run," Gary Painter, a public policy professor at the University of Southern California, said in an interview with Reuters. "As the market improves, people will start to face higher rents and over time, that will spill over into the owner-occupied market."
And according to Derek Thompson in The Atlantic, stronger figures for multifamily homes, along with rising construction rates and home prices, suggest 2013 "could be the year our economy breaks out of 'new normal' growth and gets back to 'normal normal' growth."
"A market that was at an incredibly low point has stabilized and is showing signs of getting better," said Rick Sharga, with Carrington Mortgage Holdings in Aliso Viejo, Calif., during an interview with Mercury News. "But it's all relative. We're not looking at a boom. We're looking at a slow and steady recovery."
The National Association of Realtors, meanwhile, projects its Housing Affordability Index for all of 2012 will rise to a record high. The higher the index, the greater the household purchasing power.
But the uncertain economy creates a double-edged sword for would-be home buyers.
"Although 2012 was highest on record, the excessively tight underwriting precluded many would-be homebuyers from locking-in generational low interest rates," said NAR chief economist Lawrence Yun. "Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 likely will be the third best on record in terms of household buying power. A window of opportunity remains open for buyers who can qualify for a mortgage."
"Household formation is miserable now, but it's projected to pick up for a simple reason," said the Atlantic's Thompson. "An improving economy is bound to encourage young people to get out, buy apartments, and get married, eventually."
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Whats wrong with renting? Why is this a news story? Moved out when i was 18 made correct choices and have not had any financial problems with 0 debt. I rent instead of own because I move every 2-4 years due to my job and there is no guarentee I would be able to sell when I moved. I could have gone to college and partied and not been responsible and gotten free handouts but i wasnt raised to be a freeloader or make excuses.......
I agree with johnpaul. Also when I moved out of my parents house at an extremely young age it was hard for me too. I finished or I should say started then finished my college education and had a great career and 4 lovely children.
If anyone is out there preaching to their children that they are in OZ and their wishes shall be granted should be held on fraud charges. Yes Dorothy made it to The Land of OZ but not without a lot of hard work and struggles on the way to OZ via The Yellow Brick Road. So kids grow up, leave the nest but keep in touch throughout your journey down The Yellow Brick Road Hopefully you have been taught well and you are prepared for entry level struggles and eventually your wishes should come true.
Are these kids leaving on their own or the "fed up and can`t take it any more" parents throwing them out on their butts?
My Boomerang Daughter moved back home after being laid off just before Thanksgiving 2011.In order for her to afford to live on her own, she worked 3 jobs, had no cable/internet (rary). She alternately froze & sweated to save on energy bills, and lived on pasta & ramen. For 2 years, living like this she was paying her car loan, car ins, student loan, health ins etc. She survived, not thrived. I think her "expectations" were pretty low. Now even though she lives with us, she's still struggling, because she's underemployed. All of my friends kids (25+) live at home, and all of my daughter's friends(23+) live with their parents. No on can get a good enough job to move to an apartment, forget a house.
The number of new full-time jobs paying a solid wage are not rising much, as many of the new jobs are part-time or low wage. The number of young people living at home cannot drop much if the employment data reported by the U.S. Labor Department doesn't also rise substantially, so I find the Reuters conclusion puzzling. This is probably wishful thinking by the realtors than reality.
New jobs reported in recent months rarely exceed 150,000 per month; a strong jobs market would be well over 250,000. There are now about 20 million people wanting fulltime jobs, and the labor force grows by about 1% annually or about 100,000 monthly with new graduates. So, it will take over 15 years to eliminate the jobs shortage at current job market conditions.
Obama puts his hands over his ears and says, "don't confuse me with the facts my mind is already made up!"
I just interviewed for a job in Alberta, Canada (last week). My accountant in the U.S. told me I would pay less taxes if I work in Alberta verses in the U.S. 5% less. Moreover, I found Calgary to be a much cleaner city than most cities within the U.S. Hmmmm.....wonder why? Go visit and find out for yourself. For starters, when you arrive look around in the airport, you'll begin to note the positive factors. Looks like Canada is more beautiful than I imagined.
Key word here is loan, loan, loan.
What about paying as you go through college? Car sharing, public transportation when possible.
I bought a cheap $600 car on ebay last august and am reselling it for $300 as my income has risen and I can afford a better one.
Yes we are all underpaid. The choice was made to borrow and now what does one expect? To live on steak while repaying the loan? Our wages are more a result of CEO's choices, not the governments. Keeping stockholders happy has become more important than keeping employees/customers happy.
I'm 33, live in NY, graduated college in 2007, single by choice, and can't afford to be on my own.
I worked since I was 17 and sank all my money into college and was on unemployment for 2 years.
Thought we were going to dump Pres. Loser, I can't take four more years. I will stay put and hope when i'm 37 life can begin for me. Economy still blows, and recession is still going on. I have stopped being a consumer and will only buy necessities. This country is on the decline, unless your famous or rich you are screwed and no one seems to care.
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