Zillow: Millions of potential houses lost to “doubling up”
It’s not just millennials that are moving back in with mom and dad. The number of Americans living with roommates or adult family members jumped to more than a third of U.S. adults in 2012, up from 27.4% in 2006, a new report from Zillow said.
A total of 5.4 million households have been lost to doubling up as housing costs outpaced income over the last decade.
“The rise in doubled-up households is a troubling sign of the times and starkly illustrates one of the prime drivers behind weak home sales these days,” said Zillow Chief Economist Stan Humphries. The median household size now sits at 1.83 adults in 2012, up from 1.75 in 2000.
However, this phenomenon is concentrated in markets where rent has most outpaced income, notably in California and Florida.
For example, the share of Los Angeles adults in doubled up households in 2000 was 41.2%. It now is at 47.9% in 2012. This is compared to places like Columbus, Ohio, that while it did report an increase, it only increased from 19.1% to 25.8%.
“But there is a silver lining behind this data. Like a coiled spring, all of these doubled-up households represent tremendous potential energy for the market. If and when these compressed households begin to unwind and these millions of Americans do start to create their own households, demand will bounce back, possibly even causing household growth to outpace population growth,” Humphries added.
A recent report from The Demand Institute found that millennials are finally moving out of their parents’ homes. Although, they are still opting to rent rather than buy their own house.
“One important difference between millennials and young adults in previous decades is the unique financial challenges of home ownership today, resulting from graduating into a weak job market with growing student loan debt,” said Jeremy Burbank, a vice president at The Demand Institute and Nielsen. “Many millennials are open to alternative approaches to housing finance, including single-family rentals and rent/own hybrid contracts such as lease-to-own.”
“There is no magic bullet, but continued home affordability, an increasing supply of both for-rent and for-sale homes and the potential for incomes to grow more quickly as the economy recovers will all help the market to realize this potential,” Humphries added.