It isn't all logarithms and higher-math analysis at Goldman Sachs. The investment firm's researchers have their soft side. Two economists there looked into the question of, as they framed it, "What's Keeping the Kids at Their Parents' Homes?"
Statistically speaking, they are there in greater numbers than they were post-recession. Between 2010 and this past spring, the share of young adults living in their parents' homes increased from 24 percent to 26, according to a Pew study--even though the economy improved during that time.
So what gives? Here's the Goldman Sachs take:
About one-third of the "excess kids" living with their parents is due to the "current labor force status 'composition effect.' " (According to Goldman:the aggregate share of kids that would be living with their parents if the current distribution of labor market outcomes were the same as in 2007. )
What accounts for the other two-thirds? Partly it's that "the effect of unemployment shocks on the share of young people living with their parents dissipates slowly." (Translation: It takes a while to regain faith in the future.)
But three other factors might also be playing a role:
1--Rising student debt and poor credit scores
2--The median age at first marriage has been increasing at a faster than usual rate since 2007
3--Rent-to-income ratios are at historic highs, especially for young people.
According to GS economists, "the future trajectory of these three factors is less clear, suggesting that the share of 18-34 year-olds living at home might not fully return to pre-recession rates."
GS concludes that this is not bad news if you're a home builder. There's a big bulge of adults living at home that will move out and into homes of their own--in a little while. Extending that logic: If you're a parent with a basement full of returnees, the end is in sight--but not right away.
