Why Do So Many Young People Live With Their Parents? Millennials See Record Portion Of Adults Living At Home

Key indicators, such as a low unemployment rate and rising gross domestic product growth, point to a solid economic recovery in the U.S. following the collapse of 2008. But for millennials, that may not be the case.

As the Wall Street Journal reported Wednesday, the largest percentage of young Americans since 1940 lived with their parents in 2015, with a whopping 40 percent staying at home rather than striking out on their own.

Earlier this year, the Pew Research Center found that such living circumstances were, for the first time in history in 2014, more prevalent among 18- to 34-year-olds than any other arrangement. More than 32 percent of young adults lived with their parents, compared to 31.6 percent who lived with a roommate or significant other, 14 percent living alone and 22 percent in some “other” living situation.

That trend will likely worsen in 2017. Mortgage rates have already risen steadily on the back of the climbing U.S. government bond yields since markets stabilized in the wake of Donald Trump’s election victory last month. Expectations of growth associated with the president-elect’s $1 trillion stimulus package sparked heightened demand for dollar assets.

Making things more difficult for potential homebuyers, Federal Reserve Chair Janet Yellen announced Dec. 14 that the central bank would raise its target for the federal funds rate, a monetary policy tool that tends to pull mortgage rates up or down along with it. Yellen also said the Fed planned to hike the rate three more times next year.

Rising rates may also indirectly keep millennials from moving out. Rates tend to be boosted on not only mortgages but other forms of debt, like credit cards and student loans. This could severely hurt those in America’s largest generation who have been trying to save up for their first home. As the College Investor pointed out, the average millennial’s net worth doesn’t break even until they reach age 30.