NEW YORK – Nov. 1, 2013 – High unemployment among young adults is prompting a big loss in household formation that is critical for long-term housing demand, according to housing experts.
Of 25- to 34-year olds, about 75 percent were employed in September; that’s about the same as year-ago levels and near levels during the recession, The Wall Street Journal reports.
Unemployed young adults mainly opt to live with their parents, and they’re not renting or buying a place of their own. Indeed, the number of adults under age 35 or younger and still living at home is at its highest level since 1981 – more than 30 percent. The typical average is 28 percent.
As young adults put off homeownership, the number of first-time homebuyers continues to be constrained. The National Association of Realtors® reported Monday that first-time homebuyers accounted for 28 percent of home purchases in September – down from 32 percent in September 2012.
But when young adults do get off the sidelines, it could prove a big boost to home sales.
“Assuming consistent population to household ratios and homeownership ratios, the 1.8 million individuals currently living at home would translate into an additional 590,000 households and roughly 200,000 additional homeowners – roughly a boost of about 4 percent to the projected level of sales in 2013,” according to NAR’s Economists’ Outlook blog.
Source: “Did You Know: Pent Up Demand Among Young Adults Could Boost Home Sales by 200,000,” NAR Economists’ Outlook (Oct. 1, 2013) and “Employment Shows ‘Missing Households’ Still Weigh on Housing,” The Wall Street Journal (Oct. 22, 2013)
© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688