Young Adults are Finally Leaving the Nest
"During the recession and slow recovery, young people better educated than their parents' generation have struggled to compete with older workers in a job market with several unemployed people for every opening," says Lee. "That compares with about two people unemployed for every job opening before the 2007-09 recession." Over the last several years, millions of young people ages 18 to 34 have faced difficulty finding steady employment, and, as a result, have put off moving into their own apartments, buying homes, and starting families. According to census data analysis by Timothy Dunne, an economist at the Federal Reserve Bank of Cleveland, 2 million more young adults were living under their parents' roofs last year compared to four years earlier.
The good news is that the job market is slowly improving and helping young adults spread their wings. Over the last year, the unemployment rate of people ages 25 to 34 fell from 9 percent at the start of the year to 7.9 percent last month. William Frey, a demographer at the Brookings Institution, added that last year the number of people ages 25 to 29 who moved across state lines reached its highest level in 13 years. He said, "They're leading indicators of migration coming for the broader population."
Another reason for these demographic shifts is the all-time low mortgage rates that have made owning homes more affordable. "Perceptions that the housing market is starting to heat up also have more people thinking of buying," says Lee, but he asks, "As more young adults go out on their own, one big question for the economy is: Will they rent or buy?"
Many are deciding to rent because they are not yet financially secure enough to buy a home or are concerned about the unstable housing market. "There has been much talk about the so-called fiscal cliff, but that hasn't fazed consumers, at least not yet," said brokers. "Not when 30-year mortgages can be had for 3.25%," said Vladimir Kats, a Baltimore broker with Keller Williams Realty who specializes in distressed properties and focuses more on young buyers. "The interest rate is the main driver." His former client Andrey Mayer, 26, got a 30-year mortgage at 3.75% last spring. Mayer said, "I'm betting on the economy recovering and seeing a return on investment."