Guest Post by Martin Armstrong
Boomerang kids is a term for those who moved out of their parents’ home only to return. The number of young adults who were forced to move back home reached historic highs in 2020 when the pandemic began. In fact, three in ten Gen Zers (18-25) moved back home with their parents during the pandemic as school campuses closed down. Around 18% of younger millennials (26-34) and 17% of older millennials (35-41) also moved back in with mom and dad. However, a recent report shows that two-thirds of young adults in the US who moved back home during the pandemic have yet to leave the nest.
Housing and rental costs are at historic highs and continue to rise. Inflation is soaring, rates are rising, and the youth is struggling. The demographic that should be starting families is financially priced out of doing so. Around 31% of boomerang kids said their top focus is saving for a down payment on a home, and nearly 30% of those who did move out managed to purchase a home. Around 39% of those who moved back home said they were focused on paying off debt.
About 73% of those who did move out after the pandemic were only able to rent. Unsurprisingly, states with the highest cost of living host the largest number of boomerang kids. Around 21.6% of adult children live at home in Hawaii, followed by New Jersey and Florida, which host 20.7% and 20.1%, respectively.
Young adults can no longer afford the American dream. Nearly three years after the pandemic, most young adults who moved back home have been unable to leave. Housing costs are usually the biggest expense of any household, and the youth simply cannot afford to buy in this market. This is why the birth rate is steadily declining, and the future workforce will be limited.
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Given what I’ve seen, I’m more surprised any Gen Z or millennials moved out of their parents house in the first place.
We have a grandson who has been trying to buy his first house for 2 years. Gets outbid for starter homes by corporations who are paying cash and paying 15 – 25% over asking. I’m afraid he will out of the market now that interest rates have spiraled out of sight.
This is also the reason I despise the “house flipping” programming on the tell-a-vision. Greedy pricks ( call them entrepreneurs if you want- similar to JP Morgan profiting from EBT cards) buy up the affordable starter homes that are in the price range of a young family, do some cheap ass repair/remodeling and brag about bumping the sale price $100k.
Tidy profit for $20k in paint, tearing out a few walls/cabinets/rugs and giving it a spit shine or new appliance/sink. Of course the evil Jew bankers profit on both ends- lending for repairs and then score extra profit on the backend lending for a higher mortgage on the same property/house.
These corporations appear to be getting into the rental business. Buy a house for $200K and rent it for $2K/mo and you recoup your investment in less than 9 years and still have a house that might well be worth $400K.
You Vill Own Nossing, und You Vill be Heppy….
BlackRock is one of the biggest ones in the market, but according to The Mrs., the most frequent Cold Calls we’ve been getting in the Greater Seattle Area is apparently from East Asians, probably Chinese. She’s been fielding about 4 calls a week, and they all have accents.
I get about 1-2 emails a day trying to buy my place too, which I wasn’t getting until I went to refinance in June of last year.
I told her to start answering, and tell them I want $950k, and each time they don’t acquiesce, it’s going up another $15k……
Nobody’s bitten yet….. But I don’t think she’s answering the phone. She says they keep leaving messages though.
I’ve known some house flippers personally, they are greedy pricks.
Correctly stated, “the evil Jew bankers profit on both ends-” The age-old trickery and deceit of the Jooz from the beginning of time in the Garden starting with Cain.
I have no idea the future, but I suspect it either ends in more zirp down the road or TSHTF. This in between state does not seem attractive to me, but that’s why I made my move before rates went up. We bid 15 over to get this place and we wouldn’t have got it otherwise. We got about the same over for the place we sold.
Same around me. Corporations offering at least 40% over asking in cash, no inspection and close immediately. Buying up entire suburbs around here.
Impossible to compete with that.
Mexican it. Children live with their parents. And their children will live with their parents and their parents parents.
Sqirel the dough away.
Supply and demand. Import untold millions of foreigners to take up the supply and our kids are priced out because Uncle Sam can always afford housing for new democrat voters.
Maybe I have a weird idea of how the relationship between adult children and their parents should be or what is “normal”, but I do not think that 17 year olds moving out to pretend to get an “education” while getting drunk or laid and living on Daddy’s dime is normal or desirable, and neither is the 36-41 year old cohort (as stated in the article), which is not what I would define as “young adults”, moving back in under the same roof with the parents.
Normal is more what the town farm family in my hometown did: the two boys both learned a trade while helping part time on their Dad’s farm and while living at home or in a rental apartment in town through their mid-twenties. They found girls, got married, renovated the farm house or built another single family home on the farm property, and now they are both raising their small kids on the farm, while the older couple in their 70s lives next door. Everybody lives together and yet has a place of their own and a door to lock when they feel like it, and they all help each other and have a common goal. Doesn’t seem weird to me.
That’s all great if you already have the farm.
In a perfect world…
I wish I would have taken more strategic advantage of my situation when I was younger, my parents were very amenable to me living at home after college and paying a pretty reasonable contribution, but I wanted to be “on my own” so I rented, didn’t manage to save much. I have been trying to normalize the idea for my kids, to stay with us until they have some substantial savings, and a plan. I won’t let them completely freeload, but it’s always going to be cheaper for them. I don’t have a lot to put towards “generational wealth” per se, but at least I would rather see them with a very low overhead cost of living while they get a start. My oldest is 14, maybe my attitude will change when we really get into the teenager thing?