What Empty Nest? Weak Economy Means Living at Home

You raise them, you educate them and you expect them to go out into the world. But they keep coming back.

What Empty Nest? Weak Economy Means Living at Home
Verity Jane Smith | Brand X Pictures | Getty Images

The recession and weak recovery appears to be keeping many adult children from getting a home of their own, and that could have implications for the housing industry's recovery.

A Census Bureau report released Wednesday found that between 2007 and 2011 there was a steady increase in the percentage of adults living in someone else's house – and that increase has mostly been driven by adult children moving in with mom and dad.

In 2011, Census Bureau researchers found that 17.9 percent of people 18 and older, or 41.2 million people, lived in a house in which they weren't the head of the household or that person's spouse or significant other. That's up from 16 percent in 2007, before the nation went into recession.

About half of those people were adult children living with their parents, while the rest were other relatives or unrelated people such as a group of roommates.

But Suzanne Macartney, an analyst in the poverty statistics branch of the Census Bureau and a co-author of the report, said the only group that saw an increase between 2007 and 2011 were adults moving in with their parents.

The nation was officially in recession from December of 2007 until June of 2009, but economic growth has largely been slow and unsteady in the years since.

The Census data runs through 2011. This year, economists have seen some signs that the housing industry is starting to recover, although there have been some bumps in the road.

But economists say that if a significant number of adult children continue to bunk with mom and dad, that could slow the housing industry's recovery because those people won't be out buying or renting homes of their own.

"It does have a negative impact," said Joel Naroff, economist with Naroff Economic Advisors. "The question is why is it happening."

One potential reason: They may not have a paycheck to pay the rent or mortgage.

The unemployment rate for 20- to 24-year-olds was 13.2 percent in October, far above the overall rate of 7.9 percent. For 25- to 34-year-olds, it was 8.3 percent, still higher than for the general population.

Naroff said another major factor weighing on young adults is student loan debt, which is approaching $1 trillion by some estimates. The burden of those monthly payments may be keeping some younger adults from paying the rent on their own, let alone buying a house, even if they do have a job.

"You have a lot of the kids coming out with debt, and they're not going out and buying houses, and that may be pushing out the whole process," he said.

Naroff said it's not yet clear how much of the problem is a cyclical one, caused by the high unemployment rate among young adults, and how much is a structural problem caused the increased burden of student loan debts leaving less money for things like homes.

If it's mainly an issue of unemployment, he believes it could resolve itself in the next few years. But if the burden of student loan debts are keeping people from buying homes, that could be a longer-term problem.

It's an issue he's intimately familiar with. Naroff has a son who is graduating from college in a couple weeks. In the short term, Naroff said his son plans to do some graduate work. But after that, he'll have to find a job.

"I'm already readying my extra bedroom for him," Naroff quipped.