Young Workers See Sharpest Salary Drop, Flock Back Home
Remember when parents packed the kids off to college and misted up over becoming empty nesters? Relax, Moms, the recession has fueled a generation of boomerang kids, and you can pretty much bet that yours will be moving back home even as they clutch a university diploma in their hands.
While college graduates are not returning home at the stunning and oft-repeated rate of 85 percent (chalk that one up to misinformation spread by an Internet wildfire), at least 41 percent are returning home after graduation. Many more are not leaving in the first place, opting instead to delay college or commute to the local community college.
And the impact can be felt mightily on the housing market.
When adult children move back home or don't leave when they are supposed to, two things happen, housing-wise:
1. Parents don't sell their houses and downsize into smaller purchases, and ...
2. Young adults don't enter the market as first-time homebuyers as long as they have a free roof over their heads.
For the housing market to thrive, both these market segments need to get way more active. Transactions are what keep the real estate market flowing, and right now there's a sewer clog of excess inventory related to the diminished pool of qualified buyers.
For some recent -- and not-so-recent -- graduates, living at home became the economic choice of default. Without a job, they couldn't afford to pay rent and live on their own.
Such was the case of Kelli Pearson, who at age 44 returned to the Santa Clara, Calif., home she was born in and had left 25 years before. She was laid off from her job coordinating after-school programs in April 2011, an event that she describes as "having the rug pulled out from under me."
Her parents, who lived less than an hour away, invited her to move back home. "I was just grateful for a safe place to go that kept me off the street."
Her parents travel a lot and she minds the house for them. When they are all there together, there are the inevitable "roommate issues" that need to be worked out, but Pearson says the arrangement has worked out better than she thought. She is starting her own web-based business and appreciates the lack of financial pressure living at home provides.
It's the same story with more recent college graduates who saw the tightened job market as a chance to start up companies of their own and to live with the folks while they get those enterprises running. Not having to worry about paying rent -- or buying groceries in some cases -- can give you a strong leg up over the competition.
That's what happened to Stephanie Kaplan, a 2010 Harvard University graduate who moved back in with her parents (pictured with her above) in Newton Mass., so that she could work full-time on her own startup, Her Campus. It's now the No. 1 online magazine for college women, with branches at 175 colleges across the country.
Overall, said Jeffrey Arnett, a research professor at Clark University's Department of Psychology and author of "Emerging Adulthood: The Winding Road From the Late Teens Through the Twenties," moving back home is a pattern that's been around for as long as moms have been doing laundry. The recession may have pushed a few more into their childhood bedrooms, but returning home is a time-honored tradition.
The ones in this recession to feel the sorriest for are those who don't have college degrees, he said. "That's who's having the hardest time finding work."
Wendy Manning, a sociologist at Bowling Green University, agrees. She said that based on census data, the recession has only had a slight impact on the number of college graduates who return home. "It's been exaggerated," she said.
Maybe Mom's cooking has always been the draw.