Researchers found there is no long-term advantage financially for young adults who live with their parents.

More young adults are still living with their parents and not branching out on their own, and that could have a long-term, negative impact to their finances, according to a new study from the Urban Institute. Researchers found there is no long-term advantage financially for young adults who live with their parents. The share of young adults aged 25 to 34 who live with their parents rose from nearly 12 percent in 2000 to 22 percent in 2017. The trend coincides with a decline in young adults’ marital rates, which during that time has fallen from 55.3 percent to 40 percent. An increase in rents and student debt also is keeping more young adults living at home, the study notes. But “this early life choice could have long-term consequences,” researchers note in the report about the delay of homeownership. “Young adults who stayed with their parents between ages 25 and 34 were less likely to form independent households and became homeowners 10 years later than those who made an earlier departure.”

Young adults who stayed in their parents’ home longer did not end up buying more expensive homes or have lower housing debts later on than those young adults who moved out earlier, the study showed. Urban Institute researchers say this suggests that “living with parents does not better position young adults for homeownership, a critical source of future wealth, and may have negative long-term consequences for independent household formation.” Housing is one of the most important tools for building long-term wealth, and researchers noted that those who buy a home before age 25 receive the biggest housing investment returns over time.

Source: The Urban Institute