Photo: Geoff Livingston/Flickr
Millennials in the US are often lampooned in the media as the “live in your parent’s basement until you’re 40” generation. However, new analysis of recent Census Bureau data by Fannie Mae’s Economic & Strategic Research (ESR) Group may have debunked the long-standing myth that Millennials never leave the nest.
The ESR Group’s study diverges from previous studies of the Census’ Current Population Survey (CPS), offering a different perspective on the same data. As part of its methodology, the ESR Group used a form of data analysis called “cohort” analysis, which instead examines the same group of people as they age from one age group to the next, says the ESR Group.
The cohort analysis of Census data revealed that the rate Millennials were moving out of their families’ homes was rapidly accelerating “substantially.” Between 2013 and 2015, the percentage of young adults in their mid-20s to early 30s living at home was significantly lower than it had been between 2010 and 2012 — as the country was still recovering from the Great Recession.
Among Millennials who aged from 24 to 25 in 2013 and from 26 to 27 in 2015, the portion living with family declined by 7.6 percentage points. This was compared to a decline of only 5.4 percentage points recorded in a cohort who similarly aged between 2010 and 2012, says the ESR Group.
The fact that Millennials may finally be ready to strike out on their own should benefit the housing industry. Their absence in the market has often been cited as a reason for lackluster home sales and the record-low level of homeownership in the country.
Studies have found that Millennials are generally putting off the bigger “life events” like marriage and buying a home due to severe financial stress coming from student loan debt and in many areas slower wage growth compared to housing prices.
And although the first step in independence is usually a rental unit, the accelerated pace of Millennials moving out should give multi-family and single-family markets a boost, according to the ESR Group.
Additionally, cohort analysis revealed an accelerated pace at which Millennials are taking the leap into homeownership. A percentage of those moving out will skip the rental phase and jump right into a starter home.
“Millennials at long last appear to be launching more rapidly from their parents’ homes and releasing some of their pent-up housing demand,” says the ESR Group.
Last week, the listing site Trulia examined the CPS data to compare how Millennials stacked up to previous generations in terms of housing. However, Trulia used a fairly common method of comparison, that is to compare different people of the same age group over different points in time. Mostly, Trulia found that the percentage of young Millennials living at home was on par with previous generations, and actually lower than that of the Baby Boomer generation.
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