California; Hayward — In the current landscape, achieving housing affordability poses a significant challenge for a broad spectrum of individuals. Young adults, in particular, are grappling with the formidable barriers presented by surging home prices and exorbitant rents, hindering their ability to establish independent living arrangements.
Here is what CNBC reported:
A recent survey conducted by Intuit Credit Karma indicates that approximately 31% of Gen Z adults, born between 1996 and 2012, are residing with their parents due to financial constraints preventing them from purchasing or renting their accommodation. This trend aligns with the broader pattern of an increasing number of households featuring two or more adult generations, as highlighted by a Pew Research Center report. Presently, 25% of young adults find themselves in multigenerational households, a significant rise from the 9% recorded five decades ago.
Financial factors, predominantly driven by soaring student debt and housing costs, stand out as the primary reasons for the surge in multigenerational living arrangements. The year 2023, marked by elevated home prices and mortgage rates, emerged as the least affordable for homebuyers in over a decade, according to a report by real estate company Redfin. Although there has been a slight decrease in mortgage rates, with the 30-year fixed rate averaging around 6.6%, challenges persist due to low housing inventory and continually rising home prices.
Beyond housing woes, millennials and Gen Z confront financial challenges distinct from those faced by their parents during their youth. Larger student loan burdens coupled with lower wages compared to their parents in their 20s and 30s create financial strains, making saving for a down payment on a home even more arduous.
Notably, the financial interdependence between generations is not limited to those residing in the same household. A survey by Experian reveals that over half of Gen Z adults and millennials remain financially reliant on their parents, irrespective of their living arrangements. This financial support, while crucial for the younger generation, poses a strain on the financial security of parents who find themselves supporting grown children at a time when their own economic stability is under pressure.
In cases of multigenerational living, parents tend to bear the brunt of financial responsibilities, covering a substantial portion of expenses. The Pew study indicates that the typical 25- to 34-year-old in a multigenerational household contributes only 22% of the total household income. From grocery bills to cell phone plans and insurance coverage, parents are spending an average of over $1,400 per month to assist their adult children in meeting their financial needs.
Despite the challenges, there is a silver lining. Pew's research suggests that there can be economic benefits to multigenerational living arrangements, making residents less vulnerable to financial instability. As economist Laurence Kotlikoff suggests, making the best of this financial union may be a practical approach for those navigating the complex landscape of contemporary housing and financial challenges.
Noumaan Faiz, (he/him) is a journalist and entertainer from Hayward, CA who covers culture and entertainment.
Edited by Nykeya Woods