After the financial crisis, the share of 18-34 year olds — millennials — living at home with their parents surged.
And there have been several obstacles to homeownership, namely tight credit, lack of affordable homes, high student debt, and weak income growth.
But this doesn’t mean that millennials have given up the homeownership dream following the crisis, according to Eli Hackel and Hui Shanat Goldman Sachs.
“In order to better understand the driver behind this, we look at regional data to separate cyclical impact from structural changes,” write Hackel and Shanat. To do this they looked at California, which was hurt by the downturn and North Dakota, where the shale boom helped keep the economy strong.
They found that the “share of 18-34 year olds living with parents shot up in California but stayed little changed in North Dakota.”
“The regional evidence suggests that cyclical weakness played an important role in the anemic pace of household formation over the past few years,” according to Hackel and Shanat. “As the economy recovers, more young individuals should live independently and household formation should normalize.”
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