A Record Number of Young Adults Living at Home: Levels Not Seen Since the Great Depression.

The market is incredibly tilted against young Americans. $1.7 trillion in student debt is outstanding and most of that has taken a pause in the last year thanks to the pandemic. Most of that debt is in the hands of young Americans who are paying record high tuition costs and are unable to purchase homes given the market is artificially setup to favor older homeowners with low rates and protection programs to keep values inflated while wages are depressed. It is a stark contrast when the Fed is willing to pump out trillions of dollars to save banks and key players but raising the minimum wages gets completely shut down. It should tell you where priorities exist. However, even though we are seeing manias in stocks, crypto, real estate, and other areas wages remain depressed. So it is no shock that a record number of young people are living at home.

Great Depression with a touch of Bitcoin

It is startling to see the number of young adults living at home. This was already bad pre-pandemic but take a look now:

We now have a record number of young adults living at home at levels not seen since the Great Depression. It makes sense in many ways since many young adults are saddled with extraordinary student debt and also need to pay sky-high prices for rent. Good luck buying a home in this market where inventory is at record lows and many are still living paycheck to paycheck.

Young workers largely dominated the service industry and that is the industry that is being pummeled. So you have Millennials that graduated into the Great Recession, took a major hit financially, then were getting back online only to be hit with the pandemic as many inched closer to buying homes. In many cases it will be tough to recover from this.

Millennials were the largest part of the workforce until the pandemic hit:

Gen X has done better in this storm since many are in a later stage of their career with likely more stability and they have also been in a better spot to ride out the Great Recession and pandemic. Make no mistake, this pandemic has hit all categories of people but for those owning stocks and assets it has been one of the biggest gifts ever and this is largely baby boomers and late-stage Gen Xers. You won’t hear people say this but this pandemic has been one of the biggest transfers of wealth from young to old.

So why are so many young adults living at home? First, many are in college and colleges in many places shut down for the year. So you have that – taking classes from Zoom from your home. Then you have the service industry shutting down which is heavily employed by young adults. And finally you have lower wages, less economic security, and high real estate prices which keep young adults tethered to their homes.

All of this is unsustainable and you want to have your young population have the opportunity to buy homes and save for the future. The biggest net worth item for Americans is a home because it works like a forced savings account. However, for many Millennials who have now lost more than a decade of time on this train, they are losing the compounding effects of holding onto assets. So it is no surprise that we are now seeing a record number of young adults living at home.

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