Why Millennial Renters Are Living At Home And Where

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The Editors's picture

A new study has measured the obstacles millennial renters who are currently living at home would face if they chose to move out and rent, according to apartment search company Abodo.com.

“It's our job to help people of all ages find apartments, and we know that a lot of renters are younger
 adults specifically millennials,” Sam Radbil, senior communications manager for Adobo.com said. “And with recent research showing that millennials are living at home more than ever before, we set out to uncover why this is happening, and also where this is happening most."

ABODO’s analysis of U.S. Census data found that 34.1% of Millennials nationwide are living at home. The company then took a closer look at the 16 Metropolitan Statistical Areas (with a population of at least 1 million) that exceed the national average — some of which have nearly 45% still living with parents — to see who those millennials are, and why they are at living at home.

 "We found that millennials aren't living at home simply because of high rent prices across the country,” Radbil said. “Other factors also contribute to millennials living at home, including education level, student loans, unemployment and low pay. Many millennials are not only earning less than their parents did as younger adults, but the majority of millennials who pursue college degrees are eventually saddled with an average student loan debt hovering around $30,000."

Is landlord judgment an issue?

“We compared the median salaries of the millennials living at home with the median rents in their respective MSAs to see what their rent-to-income ratio would be if they lived on their own as a possible
explanation for their choice to stay with parents,” Radbil said.

“Even aside from the budgeting judgement of these millennials, it could be that the judgement of the landlords is also impeding their ability to move out.

“Many landlords have income requirements — such as at least three times rent. So even if millennials would plan to budget carefully to make ends meet after moving out, many property managers wouldn't even take them on as tenants given their income,” he said.

The 16 MSAs with the highest percentage of millennial renters living at home are scattered all across the country. Here are the top 10 rankings:

  1. Miami-Fort Lauderdale-West Palm Beach, FL, where a whopping 44.8% of 18- to 34-year-olds live with their parents
  2.  Riverside-San Bernardino-Ontario, CA,  44.5%
  3. New York-Newark-Jersey City, 43.8%.
  4. Los Angeles,  41.5%
  5. Philadelphia, 41%
  6. Detroit, 40%
  7. Chicago, 39.1%
  8. Providence, 38.1%
  9. Baltimore, 36.9%
  10. Cleveland, 36.4%

Finances pay a key role for millennial renters, study says

“The choice to live at home isn’t always a choice, of course,” Radbil said.

“For many millennials, it’s an inescapable economic reality. In the 16 MSAs we’re examining, the unemployment rate for millennials living at home ranges from 8.7% (Los Angeles-Long Beach-Anaheim) to 12.6% (Riverside-San Bernardino-Ontario). Half of the MSAs exceed the national unemployment rate for Millennials living at home, which at 10.1% is more than three percentage points higher than the national unemployment rate for all millennials.

“It’s hard to pay rent if you can’t find work. But even if you do have stable employment, is renting a feasible possibility? In the 16 cities we examined, the answer is: not very,” he said.

The U.S. government defines a cost-burdened renter as someone who spends more than 30% of his or her income on rent. In every MSA on this list, millennials living at home would be severely cost-burdened if they moved out of mom and dad’s basement. In all 16 MSAs, the median rent is at least 68% of the median monthly income of millennials living at home, and often, it’s closer to 90%. In Washington-Arlington-Alexandria, the median rent actually exceeds the median monthly income for millennials living at home.

Of the 16 cities where the percentage of millennials who live at home is higher than the national figure, Cleveland has by far the lowest median rent. Nationally speaking, $746 per month isn’t outlandish. But the unemployment rate for millennials living at home in Cleveland is 11.9%. And even if that millennial living at home has a job, the median rent would account for 71% of his or her income.

On the other hand, Boston-Cambridge-Newton has the most highly educated population of millennials living at home. Over 26% of millennials at home have undergraduate or graduate degrees. The unemployment rate for millennials is 5.52%, below the national figure. And yet 35% of millennials live at home. Only 8.9% of them are unemployed, but they face a median rent of $1,316 a month — 93% of the median monthly income for millennials at home.

Study summary:

Millennials — the largest, most educated generation in history — are increasingly living with parents in lieu of striking out on their own. They already account for the majority of the workforce, they’re expected to comprise 75% of it by 2030. So why is this economically powerful generation choosing to stay home?

The problem isn’t just high rent, or just lack of education, or just unemployment, or just low pay. Often, it’s a combination. Millennials are not only earning less than their parents did as young adults, but the majority of millennials who pursue post-secondary education also graduate saddled with an average student loan debt hovering around $30,000.

Additionally, wages aren’t increasing at the same rate as rents. In all of the cities we examined — MSAs with more than 1 million residents — millennials living at home earned a median monthly income of $1,121 — nearly $1,000 less than the median monthly income of all millennials, which was $2,023. Do they earn less because they don’t need to be paying rent? Or are they staying with parents because median rents account for nearly their entire paycheck?

“For many of these 18- to 34-year-olds, living with parents isn’t simply a lifestyle choice, but a necessity brought on by high rent prices and relatively low incomes. It’s not hard to see why moving out isn’t an attractive possibility,” Radbil said.

 

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