American millennials have found a way to buy houses: live with mom and dad

At 26 years old, Brandon Paulin He couldn’t believe he was still living with his parents. Already the mayor of his hometown, Indian head (Maryland), Paulin was still sleeping in his children’s room. He watched friends he grew up with move into their own apartments after college, and he longed for that same self-sufficiency with his fiancée. Tarynwho lived 30 minutes away and also lived at home to save money.

But it also meant he never paid a penny in rent, compensating for the awkwardness of growing up under his parents’ roof. In June 2022, he and his now wife had saved enough to put a down payment on a two-bedroom home with a beautiful garden for their beagles, Bella and Lilo.

“It was an unusual way to buy a house,” says Pauline. “But that’s what worked for us.”

The strategy has gained support among young people trying to bridge the gap between soaring rents and a dismal housing market. In 2022, the percentage of first-time buyers moving directly from a friend or family member’s home into their own home reached 27%, according to the agency. National Association of Realtors.

That’s the highest percentage since the group began keeping records in 1989. Although the figure has fallen to 23% this year, it is still high, according to Jessica LautzDeputy Chief Economist and Vice President for Research NAR.

For many millennials, sheltering in place with family gave them breathing space to save up for a home. The trade-off comes down to temporarily giving up some degree of independence to achieve a goal that is increasingly out of reach for people your age.

Lautz He said the current generation faces a number of obstacles — student loan debt, car payments and daycare costs, among others — but none of them exceed record high rent prices.

In November, the national average price for a one-bedroom apartment was about $1,500 a month, Zumper said. But it is significantly higher in large urban areas, which are a beacon for young professionals such as NY ($4300), San Francisco ($2970) Miami ($2600) and COLUMBIA REGION. ($2330).

“The cost of rent is prohibitive for young people,” Lautz said. “And perhaps during the pandemic they decided: Why should I rent? “Why don’t I live at home?”

At the same time, they are faced with a difficult real estate market characterized by high sales prices and interest rates, and they become increasingly hopeless and frustrated. Last year, the average age of first-time home buyers rose to 36, according to the agency. NARcompared to 29 in his parents’ generation.

Meanwhile, home prices remain near all-time highs. According to Federal Reserve.

Interest rates on 30-year fixed-rate mortgages fell below 7% for the first time in months. Borrowing costs are more than double what they were at the start of last year.

Inventory—especially the number of starter homes—remains at historic lows; Young buyers are also being overtaken baby boomers who pounce on all-cash offers. Fewer homes sold in October than any other month since 2013, and 2023 is projected to have the fewest existing home sales of any year since 2011, according to NAR.

“Given the decline in housing affordability, it is not surprising that young people are staying in their parents’ homes longer to manage their expenses, save on rent and save for a down payment on a home,” he said. Mark Zandihead economist Analytics Moody.

Zandi said he wouldn’t be surprised if the trend continues. Supply shortages, especially for starter homes, could become “increasingly difficult,” he said.

Zandi cited 2023 census data showing 20% ​​of men aged 25 to 34 live with their parents, a figure that has continued to rise since the 1980s.

In women of this age, this figure was 12% and has also increased steadily over the past five decades. Although these numbers are growing USAthey are still far behind countries like maltwhere 70% of adults under 35 lived at home with their parents in 2022, according to Eurostat.

Polen, who is in his third term as mayor Indian headsaid he lived in the basement with his younger brother, who kept him up at night talking to his friends during games. Fortnite

.

Paulin said it was annoying, but his living conditions allowed him to save most of his income, and he was relieved to buy a house last summer for about $350,000 at a 6 percent interest rate.

“It doesn’t look like we’re going to get much more,” he said. “And we were afraid that if we continued to wait, interest rates would continue to rise,” he added.

Alex MurousiasA 33-year-old computer engineer from Chicago, did not want to return to his father, because he had lived alone for many years. But it was mid-2020, and the coronavirus pandemic kept people indoors. Father Murousias He had a proposal: he would not charge his son rent and let him save enough for a down payment.

Murousias It was sold. He lived with his father for six months. And when his father moved in with his new wife after selling the house, Murousias moved in with his mother. According to Murousias, it wasn’t all bad: Their house was big enough that they wouldn’t disturb each other, and they would often get together after dinner to watch reality TV. 90 Day Fiancé.

When the lockdown began to lift in mid-2021, Murousias had enough money for a down payment. In July 2021, he bought an apartment in Chicago’s West Loop for $386,000 with an interest rate of 3 percent.

“They gave me a great gift,” he says. Losing the freedom to live alone “was a very fair price to pay for what I got out of it.”

Avalanche millennials the use of free or reduced rent from one’s relatives coincides with the increase in the prevalence of households several generations. Number of Americans living in households several generations has quadrupled since the 1970s, according to an analysis of census data by Pew Research Center.

Pew attributes the increase in part to broader population growth trends, such as the increasing number of Asian, Black and Latino families living in multigenerational households at higher rates than their white counterparts.

About a third of American adults said caring for a family member was one of their main reasons for organizing, and 4 in 10 cited financial concerns, according to the study. Researchers bench They found that people living in multigenerational households are less likely to live in poverty, especially the most economically vulnerable groups such as blacks and Hispanics.

Rising homeownership costs have particularly hit Black and Latino buyers, who have taken out mortgages at falling rates since the start of the pandemic, he said. Jose Loya

associate professor of the department UCLA which explores housing inequality. These groups are disproportionately affected by rising housing prices because they tend to have lower incomes, he said.

“They stay away,” says Loya.

Millennials who move into family homes located in booming real estate markets often find themselves pushed out of their neighborhoods. This happened to Jackson Cowart and his wife Emma, ​​who moved in with his mother. Cowart to her home in suburban Seattle for seven months to help her with a medical problem.

Even with a combined annual income of about $200,000, they knew they would be completely priced out of the Seattle real estate market, where the average sales price is about $840,000, according to Redfin.

Cowart says he and his wife were constantly looking for houses online during the months they were at his mother’s house. They finally settled on a two-bedroom house 70 miles west of Seattle, nestled in the woods at the base of a mountain. Olympic National Park.

“It was worth it,” Cowart says.

Washington Post