Generation Z adults moving in with their parents due to high housing costs

Rising housing costs This means a growing number of adults are returning home to their moms and dads after graduation, causing financial stress for generations, a new study shows.

About 46% of parents said they had “boomerang” adult children who had returned home to live with them at some point, according to research from financial services firm Thrivent. Half of that share attributed the trend to the rising costs of housing and rent, with that particular sentiment up 15 percentage points from just a year earlier.

“This is a wake-up call that has gone unanswered,” Chaz Black, Thrivent’s financial advisor, said in a news release. “More young adults returning home underscore the enormous – and growing – financial pressures they face after graduation.”

The data shows that the pressure is also transferring to their parents. When children returned to live with them, 38% of their parents said they were struggling to pay off their own debts, with this share increasing from 23% a year ago. Nearly 37% found it difficult to save for their long-term housing and retirement goals; sentiment has more than doubled from 16% in 2023. Thrivent conducted its recent poll in April, surveying more than 2,200 people.

A previous Redfin study earlier this year similarly illustrated the impact of current housing affordability on both younger generations and their dependence on family in a challenging housing market. In that study, the brokerage noted rapid growth number of Generation Z and millennial consumers receive down payment assistance or other forms of support from their parents.

Although the pace of home price growth slowed over the past year, affordability has not improved as interest rates have soared to multi-decade highs, putting a purchase out of reach for would-be homeowners. Payments for an average-priced home represented more than 32% of the average national monthly income in the first quarter of this year, a level several percentage points higher than what would be considered affordable according to Attom

But it’s not just housing costs that make home ownership elusive for young people, according to Thrivent’s survey. Student debt limits their ability to save, with approximately 28% of young adults with student loans reporting living paycheck to paycheck. Only 22% said their first job helped them pay off their debts enough.

Their view causes anxiety among parents about the future financial well-being of their children. Among parents with young adults at home, less than half said their children were ready for financial independence. A share of 55% gave their child a “C” grade or lower in financial readiness, while 11% assigned an “F.”