Almost 40 percent of young people in the United States live with their parents or other elders, according to a report released last week by real estate analytics firm Trulia.
It marked the highest such ratio since 1940, when the American economy was still reeling from the Great Depression.
The living-at-home rate typically falls when economic growth picks up and unemployment rate drops, if the experience from more than 10 economic cycles over last century in US history is of any reference.
This is quite understandable given that young adults can more easily afford to buy or rent their own places under better economic conditions.
The average annual economic growth rate of the US exceeded 2 percent in last three years, and unemployment rate dropped to a 10-year low of 4.6 percent last month from 9 percent in 2011.
So why has the living-at-home rate increased by nearly 5 percentage points since 2011?
Part of the answer may lies in the surging home prices.
US housing prices have risen much faster than income growth of most Americans after years of monetary easing measures.
S&P Case-Shiller index of US home prices, a 20-city composite, has gained 43 percent since 2011. By contrast, the median disposable income of young Americans has only increased by 14 percent in the same period.
Also, the millennials have very different values compared to their ancestors. Most of them are either the only child or have just one sibling. Having been raised in a caring family and being able to enjoy a lot of freedom even living with their parents, they have less incentive to leave their nests.
The definition of American dream has also changed vastly.
Twenty eight percent of young adults in the US didn’t include home ownership as part of the “American Dream”, according to Trulia. In the previous survey, only 20 percent of the young adults excluded that factor.
Many millennials, meanwhile, are also opting for being single. Only 32 percent of young Americans are married or were living with a partner in their own household, the first time this ratio fell below the living-with-parents ratio in more than a century.
This article appeared in the Hong Kong Economic Journal on Dec. 23
Translation by Julie Zhu
[Chinese version 中文版]
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