Why Do Young Adults Coreside with Their Parents?

Acolin, A., Lin, D., & Wachter, S. M. (2024). Why do young adults coreside with their parents? Real Estate Economics, 52(1), 7-44. https://doi.org/10.1111/1540-6229.12467

67 Pages Posted: 11 Apr 2023 Last revised: 12 Mar 2024

See all articles by Arthur Acolin

Arthur Acolin

University of Washington - College of Built Environments

Desen Lin

California State University, Fullerton

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Date Written: September 30, 2023

Abstract

Nearly one in every two adults aged 18–29 currently lives with their parents, compared to slightly more than one in four in 1960. The literature focuses on changing labor market conditions and marriage-childbearing delays to account for this shift. Using a Blinder-Oaxaca procedure, we identify a role for housing affordability, measured by market level median housing rent or price to median household income ratios, as an additional factor in the increase in co-residency since but not before 2000. We endogenize the marriage-childbearing decision with a Heckman selection model and attribute up to a quarter of the observed 9-percentage-point increase in the co-residence share between 2000 and 2021 to a decrease in housing affordability. We find a non-linear relationship between affordability and co-residence with the relationship strongest in the least affordable metros where affordability constraints might be more binding. Overall, these results show changes in market level housing affordability are associated with the increase in young adult co-residence over the first two decades of the 21st century.

Keywords: household formation, young adults, housing costs, Covid pandemic, housing demand

JEL Classification: D12; R21; R2

Suggested Citation

Acolin, Arthur and Lin, Desen and Wachter, Susan M., Why Do Young Adults Coreside with Their Parents? (September 30, 2023). Acolin, A., Lin, D., & Wachter, S. M. (2024). Why do young adults coreside with their parents? Real Estate Economics, 52(1), 7-44. https://doi.org/10.1111/1540-6229.12467, Available at SSRN: https://ssrn.com/abstract=4396015 or http://dx.doi.org/10.2139/ssrn.4396015

Arthur Acolin

University of Washington - College of Built Environments ( email )

224 Gould Hall
Box 355726
Seattle, WA 98195
United States

Desen Lin (Contact Author)

California State University, Fullerton ( email )

Fullerton, CA 92834-9480
United States

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

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