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Jobs, low mortgage rates prompt more young adults to leave the nest

Kevin Ratz, 27, of Chicago recently moved out of his parents’ home in suburban Detroit. Adults in their 20s and early 30s are moving into apartments and buying homes in increasingly greater numbers, experts say.

Chicago Tribune

Kevin Ratz, 27, of Chicago recently moved out of his parents’ home in suburban Detroit. Adults in their 20s and early 30s are moving into apartments and buying homes in increasingly greater numbers, experts say.

After riding out the tough economy in their parents' basements, more young American adults are starting to break out on their own, pushing up the nation's mobility rate and giving an important boost to the housing market and the broader recovery.

Thanks to improving job prospects and super-low mortgage rates, adults in their 20s and early 30s are moving into apartments and buying homes in increasingly greater numbers, according to real estate experts and government statistics.

Census Bureau data show that the nation added more than 2 million households in the 12 months that ended March 31, about triple the annual average for the previous four years. Most of the gain came from middle-aged and older baby boomers, but young adults are hitting the road as well.

The recession had knocked the overall U.S. interstate migration to a post-War World II low, but last year the number of people ages 25 to 29 who moved across state lines reached its highest level in 13 years, said William Frey, a demographer at the Brookings Institution.

People tend to move long distances for new jobs. During the recession and slow recovery, young people who are better educated than their parents' generation have struggled to compete with older workers in a job market with several unemployed people for every opening. That compares with about two people unemployed for every job opening before the 2007-2009 recession.

Without sufficient incomes, they delayed marriage and having children, and they simply stayed where they could pay little or no rent. The result was that 2 million more adults ages 18 to 34 were living under a parent's roof last year than four years earlier, according to an analysis of census data by Timothy Dunne, an economist at the Federal Reserve Bank of Cleveland.

In the past year, the jobless rate of those ages 25 to 34 has dropped a little more sharply than it has for the overall population. It fell to 8.3 percent in October from 9 percent at the start of the year for those workers, compared with a decline to 7.9 percent from 8.3 percent for all workers.

"With stronger economic fundamentals, the process will pick up speed," Dunne said.

As more young adults go out on their own, one big question for the economy is: Will they rent or buy?

Many are deciding to rent because they can't afford to buy or are wary about the housing market. But there's a dwindling supply of available apartments in large cities, where young adults tend to settle. Builders have been slow to put up new units, pushing down vacancy rates and driving up rents.

Meanwhile, mortgage rates have fallen to historical lows. That has made owning a home more affordable — even competitive with renting. Perceptions that the housing market is starting to heat up also have more people thinking of buying.

8.3% Jobless rate in October for those ages 25 to 34, down from 9 percent at the start of the year.

Jobs, low mortgage rates prompt more young adults to leave the nest 12/10/12 [Last modified: Monday, December 10, 2012 11:33pm]

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