More Americans are squeezing under one roof, limiting household formation, and it’s only getting worse. The number of Americans living in someone else’s home has increased 4 percent over the past year to 2.4 million, despite an improving job market, The Wall Street Journal reports.
These so-called “missing households” are adults who otherwise would be owning a home or renting but have opted to live in someone else’s home. Many of these people are living with their parents: Some studies show that 31.3 percent of Americans aged 18 to 34 still live with their parents. Seniors who are living with an adult family member are also big contributors to the “missing household” phenomena.
Stagnant household formation remains a major obstacle for the economy and the recovering housing market. But with recent progress in the economy, why is household formation still being held back? Analysts say unemployment remains high, wages are stagnant, and many young adults still lack the down payments to qualify for mortgages. High rents also may be dampening household formation. Other studies have shown that more Americans are delaying starting families, thereby taking longer to move out on their own.
“Economists say household formation is closely linked to home construction: If the 2.4 million ‘missing households’ took the leap and entered the housing market — either as renters or buyers — overall housing demand would increase, leading to a pickup in construction,” The Wall Street Journal reports.
Source: “More Americans Living in Others’ Homes,” The Wall Street Journal (July 23, 2013) [Log-in required]