Home Is Where Your Parents Are

When the Affordable Care Act passed, I thought one of the odder provisions was allowing children to remain on their parents’ health insurance until they were 26. This is largely a healthy population, cheaper to cover than pretty much any other demographic. They could have gotten inexpensive coverage through the exchanges or, if qualifying, through expanded Medicaid, It made no sense to me that their parents should subsidize them, or that, even more, their parents’ employers should subsidize them.

Mom, dad - I'm coming home to live!  Credit: Microsoft Designer

It proved to be surprisingly both popular and effective, to the point young adults now “dread” turning 26 because they’ll have to figure out health insurance on their own.  So I guess I shouldn’t have been surprised to learn that young adults are also living with their parents at record levels.

The numbers vary, but tell the same story:

• A May report from the Federal Reserve says 49% of young adults under 30 lived with their parents, up from 43% in 2022 and 37% in 2017.
• Census Bureau statistics indicate that 33% of young adults aged 18-34 – some 25.2 million of them – lived with their parents, just slightly below the COVID high of 33.6%.
• The Urban Institute found 20% of Americans aged 25-34 lived with their parents, down from 2017’s peak of 22.8% but nearly double 2005’s 11.8%.  
• Data from the National Bureau of Economic Research, first published in 2022 and updated last month, indicate that more than a quarter of college graduates aged 23 to 27 lived with their parents, reaching the high it reached during COVID; by contrast, in 2001 it was 18%.
• A survey from storage solutions company Sparefoot found that 58% of young adults who had once lived independently moved back home at least once; 15% did it more than once.

As Sparefoot pronounced: “The boomerang generation is no longer an outlier. It is the norm.”

People offer lots of theories about this trend, but most commonly blame jobs and housing. Many young adults have a hard time finding a job they want, for which AI is often blamed, correctly or incorrectly. Housing costs have skyrocketed.

Still, most of these at-home young adults are, in fact, working. Hannah Jones, the senior economist at Realtor.com, who authored its report on the topic, says: “The employment rate for this demographic has remained relatively stable, but the share of adults living at home has still increased.”

Credit: Realtor.com

The report also points out that the wave started with the Great Recession of the late 2000’s:

Between 2007 and 2010, co-residence rates rose sharply, and when the economy recovered, the rates didn’t come back down. A full decade of falling unemployment and rising wages did not reverse the trend…The housing supply never rebuilt fast enough after the crisis to absorb the households that should have been forming, and the gap kept widening through every year of the expansion.

COVID then made everything worse, so that: “By 2025, the overall co-residence rate had nearly matched its pandemic peak, and the absolute count, 25.2 million adults, had surpassed it.”

The median price for a new home is around $400,000, while the average rent for a one bedroom apartment is $1,663, both of which can be daunting for young adults. That’s why Rebecca Picciotto and Nicholas G. Miller of The Wall Street Journal reported: “Living at home as a 20-something was once viewed as a failure to launch and even a source of embarrassment in a culture that places a premium on independence. That is no longer the case. Living at home is now often viewed as a sign of financial prudence, and for some, a long-term prospect.”

Odysseas Papadimitriou, the founder and CEO of Wallethub, agrees, saying that living with parents ““is actually a very smart financial decision for a young adult,” although he was clear to add: “This arrangement should leave you with more disposable income that you can save for a down payment on your first home. It should not be an excuse to spend more on things that won’t benefit you long term.”

Three fourths of the Sparefoot respondents felt that moving in with family “is a smart financial strategy, not a setback,” which the company believes marks “a clear cultural shift in how the path to independence is perceived.”

Ms. Picciotto and Mr. Miller note that, rather than hiding their situation, some stay-at-home young adults “now broadcast their lives as “stay-at-home daughters” or “stay-at-home sons” on social media,” including Tik-Tok videos.  

There is a general sense that it is tougher for young people financially now than in previous generations. Northwestern Mutual's 2026 Planning & Progress Study found 56% believed that achieving financing independence was harder today than for previous generations. A Pew Research Center survey found 80% said it was harder for young adults to cover basic expenses than it was for their parents. Compared to the 2021 survey, finding a job jumped the most in terms of getting harder, but at 64% is well below the difficulty of buying a home (87%), paying for college (82%), or saving for the future (80%).

Some think affordability doesn’t explain everything. Noam Scheiber reports in The New York Times:

Smartphones and video calls have meant that going off to college no longer requires cutting the cord with one’s mother or father, making re-entry less jarring to both parent and child. And huge social disruptions like the Great Recession and the pandemic left many young adults with no alternatives, lessening the stigma.

My generation communicated through snail mail and infrequent, expensive long distance calls, so there was a much greater sense of separation.

Perhaps it is no coincidence that fewer young people report having sex: one in four Gen Z adults have never had sex, and the number of young people who haven’t had sex in the last year doubled from 12% in 2010 to 24% in 2024. Not all of those sexless adults are living with their parents, but the living situation has to have had an impact.

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Lawrence Katz, a labor economist at Harvard, told Mr. Scheiber: “Is there some cultural change in the way people are parenting? You see kids today and the degree to which they’re interacting with parents, that’s completely different than the world of 50 years ago, 25 years ago.” I’d agree. I’m a baby boomer. We didn’t trust anyone over thirty, we rebelled against our schools, our government, our societal norms, and, of course, our parents. Moving back in with our parents was unthinkable. But young adults today are facing challenges that we certainly never did think of.