Today’s young adults are more likely to live longer with their parents and less likely to move into their own home when they leave. That’s according to our new analysis of young adults’ living arrangements, which found the average age young adults left their parents’ homes rose from about 23 in the 1990s to roughly 26 in the 2010s. The share of young adults moving out of their parent’s place and straight into homeownership has also steadily declined.
Although some young adults may live with their parents to save for homeownership, our prior research has shown those who stay with their parents longer are less likely to be homeowners 10 years later, compared with those who moved out as either homeowners or renters. People who buy their homes after age 35 also have substantially less housing wealth in their sixties compared with those who buy before age 35. This suggests that if we don’t address these challenges, delaying homeownership is likely to have long-term financial consequences for many of today’s young people.
Using data from the Panel Study of Income Dynamics, we explored what factors might be driving more young people to delay homeownership and instead stay with their parents longer or move out as renters. We found that since 1990, the share of young adults starting as homeowners in states with the highest home prices has fallen substantially, suggesting that increasingly unaffordable housing markets play a role in whether young people move into homeownership.
Even young adults with higher incomes are less likely to start as homeowners
Between 1990 and 2009, young adults were more likely to leave their parents at a later age than in prior decades, but about 20 percent of young adults became homeowners when they left. Since 2010, this number has dropped below 18 percent. Home prices, especially at the lower end of the market, increased rapidly during this period.
Although young adults with higher incomes are more likely to start as homeowners, even those in the highest-earning group have been less likely to start as homeowners since 2010.
The likelihood of young adults starting as homeowners has declined in states with high home prices
To understand how local housing markets might affect homeownership rates among young people, we put states into three categories—high-, medium-, and low-cost markets—using median home sales prices in January 2021. Because the 10 states with the highest home prices have higher populations, we grouped these states into the high-cost category and divided the remaining states into the medium- and low-cost groups.
From 2010 to 2021, the average age young adults moved out was around 26 or 27 years old in all three categories. This suggests that even in the most expensive markets, young adults do not delay moving out once they reach a certain age.
The share of young adults starting as homeowners has remained relatively stable over time in lower-cost markets, but it has fallen in the 10 most expensive states. Even as home prices have increased, young people have continued to move to areas with the highest housing costs, such as California; Washington, DC; New York; Massachusetts; and Washington, attracted by their superstar cities, which offer better job opportunities and amenities.
According to Census Bureau data, overall homeownership rates in the US have remained largely stable in all three cost categories in recent decades. In the highest-cost states, the overall homeownership rate increased from 57 percent in 1990 to 59 percent in 2022, while the homeownership rate among young adults declined by 3 percentage points over the same period. This suggests that starting as homeowners has become more difficult for young adults, especially in areas where housing became more unaffordable.
Parent homeownership and wealth still matter but less so in today’s high-cost markets
Children of homeowning parents are more likely to start as homeowners when they move out. About 21 percent of young adults whose parents owned a home started as homeowners from 2010 to 2021, compared with just 10 percent of those with parents who rent. This percentage has remained largely the same since 1990.
Parental wealth also matters. In general, young adults with wealthier parents have been more likely to own a home when they move out. Recently, however, this trend has shifted: since 1990, the share of young adults who start as homeowners has continuously declined among those with the wealthiest parents.
Although more research is needed, one potential explanation is that parents whose wealth exceeds $200,000 are concentrated in higher-cost markets, which have become unaffordable for younger adults. More than 80 percent of young adults who moved out of their parent’s home continue to live in the same state as their parents. Among young adults with the wealthiest parents who have moved out of their parent’s home, the highest share (about 41 percent) live in high-cost markets.
As homes have become more unaffordable, more young adults plan to get family support to buy a home. According to a nationally representative Redfin survey, 36 percent of young Americans plan to use cash from their family to fund a down payment on a home in 2024—double the share in 2019. For young adults without family resources to rely on, accessing homeownership will likely become more challenging.
Given the substantial rise in interest rates over the past two years, it’s likely the share of young adults starting as homeowners has continued to decline, even in less expensive markets.
How policymakers can support young homebuyers
Addressing barriers to moving into homeownership will require a comprehensive approach. Policymakers could consider policies that make buying a home more financially feasible for young, first-time homebuyers. The Biden administration’s recent proposals—which would provide tax credits to first-time homebuyers and down payment support to first-generation homebuyers, who are more likely to have less financial support from their parents—could help more young people become homeowners.
Improving young adults’ homeownership outlook will also require increasing the supply of affordable homes. Policymakers at the local level could reform zoning and other land-use laws to allow for increased density and more types of housing, such as multifamily housing, low-density infill housing, and manufactured housing, which is inherently less expensive.
Federal policymakers could also provide communities incentives to increase their housing supply. They could reward communities who update local zoning and land-use laws to increase the supply of affordable housing, as proposed in the Biden administration’s competitive innovations grants (PDF) program. Alternatively, federal policymakers could take a more punitive approach and condition federal funds on land-use rules that encourage development.
By improving housing supply and creating opportunities for young people—especially those with lower incomes or whose parents have less wealth—to become homeowners, policymakers can help millions of young people move out of their parents’ basement and into their own homes.
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