More grown children finally leaving the nest

New data suggest the economy has recovered to the point that more young adults are moving out.

By Bruce Kennedy Jan 21, 2013 9:12AM

Image: Couple with home (Stockbyte/SuperStock)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."


More on Money Now


31Comments
Jan 21, 2013 3:17PM
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So let me get this straight.  The fact that people can only move out of their parent's home if they can bundle expenses with others is a good thing.  The fact that people are now having to rent because they cannot buy is a good thing?  Just how is this positive economic news??
Jan 21, 2013 2:55PM
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Those "boomerang kids" (or adults who live off their parents) just need to lower their expectations a bit.   It may be a struggle (yes, a hard one) but once you graduate from college and you are 22 years old, it's time to be ON YOUR OWN.
Jan 21, 2013 3:48PM
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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.......

Jan 21, 2013 2:57PM
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Anything to put a spin on the regime's dismal economic failure!
Jan 21, 2013 3:27PM
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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.

Jan 21, 2013 3:45PM
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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?

Jan 21, 2013 4:09PM
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I was kicked out of the house at age 17 (dad didn't appreciate my rebel ways). It was 1976 and I managed to find a way to survive. How? I did menial labor and was not too proud to cut grass, shovel manure, or whatever dirty job that paid. I'm now a VP, hold multiple degrees, and served as as enlisted man in the USAF for 21 years. Moral of the story? NO FREE LUNCH!!! Get out there and work your **** off and life will come your way!!!!
Jan 21, 2013 4:16PM
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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.   

Jan 21, 2013 4:38PM
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I own a business and  hire the people who work for me.  I hate to sound negative but hiring these teenage to 20 something kids is almost always a waste of time.  After spending most of their young lives playing XBOX or Play Station and never really having any responsibilities at home they come looking for work.  They all want large salaries for meaningless work, want off nights or weekends & if something better comes along they blow off work.  Just so I am clear I do pay a more than fair wage as I would rather pay more & keep their services than to keep training new people.  Honestly, I am doing better by hiring older people as they know the value of a job.
Jan 21, 2013 6:07PM
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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.

Jan 21, 2013 4:42PM
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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.   

Jan 21, 2013 8:13PM
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  They will be back home shortly , Obamass was just re-elected .
Jan 21, 2013 4:34PM
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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.

Jan 21, 2013 4:00PM
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Are kids living off their folks because they are so spoiled they think they should stay at home, keep all of their cash, and live rent free until they can afford a home of their own?  That's what I think.  Most of them think it is beneath them to move into small apartments, with mismatched furniture, and hand-me-downs.  Somehow the media, and their over-protective, overindulgent parents have given them the idea that struggling when they are young to live within their means is not for them; that a BMW or  mani and pedi, a designer handbag, and highlights and lowlights in their hair every few weeks is more important than becoming financially independent.  What is with all of these young men and women who drive sports cars while still living at home?  Is that not the ultimate in parental indulgence?  I guess the parents who are stuck with 30 and 40 year old kids are reaping the rewards of their indulgence.  When they are broke in their retirement, they should certainly be able to "bunk" with their adult children.  They should think about whether or not that will be a possibility when they decide at what age to change the locks for the final time on the family homestead.  If your kids don't seem like the type to take you in in your old change, you should consider refusing them anything more than a weekend stay after they are out of college. 
Jan 21, 2013 3:51PM
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well in this obamanation mom and dad, get ready for junior to come home since he can't find a job so don't turn that kids' room into an office or den just yet, 4 more years of a nightmare worse than the previous one, enjoy it, you voted for that monster again, and now you deserve everything that's coming oh and in case you think the middle class insn't going to get hammered by new taxes then you people are even bigger idiots than I thought, beyond denial, the welfare state is going to break the backs of the middle class since, guess what!!! there isn't enough rich people to foot the bill for obama's idea of utopia! once again you idiots that voted for this musllim bastard you're directly responsible for you own demise, GOOD!!!
Jan 21, 2013 3:19PM
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TOTAL BS.

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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