High interest rates, student debt, and the lack of starter home inventory are making it harder than ever for young adults to live on their own.
In fact, the most recent U.S. Census figures found that 33% of individuals aged 18 to 34 live with their parents—nearing the historic highs seen during the COVID-19 pandemic.
Some states are experiencing this trend more than others. It’s most common in New Jersey (44.1%), Connecticut (41.3%), California (39.1%), Maryland (38.5%), and Florida (36.6%).
“The trend of young adults staying at home longer has really become a norm in our market rather than the exception,” says Daniel Smith, team lead at Smith Realty Team in Jersey City, NJ. “Close to half of the first-time buyers I speak with are currently living at home or have recently moved back. It’s not just about affordability anymore, it’s become a strategic financial decision to help them save for a house.”
Meanwhile, failure to launch from the nest is less prevalent in places with more affordable housing like North Dakota (12.3%), District of Columbia (13.3%), Wyoming (16.2%), South Dakota (17.7%), and Nebraska (20.4%).
Whether you’re a young adult who is living at home or a parent welcoming a child back in, it’s important to set clear expectations, financial goals, and timelines, so the arrangement works for everyone involved.
The drivers behind this trend
Experts agree that there are three primary factors that make housing affordability a real challenge for younger Americans right now:
First, young people carry large amounts of student loan debt, averaging $37,287 for New Jersey borrowers.
“Such loans cost $300 to $450 per month, depending on repayment terms, so the available mortgage amount decreases by $60,000 to $90,000 due to these additional expenses,” explains Cody Schuiteboer, president and CEO of Best Interest Financial in Detroit.
Second, high interest rates have significantly reduced mortgage purchasing power for individuals under 35.
“For example, someone whose income allows them to afford a home priced at $400,000 at a 3% mortgage rate would only be able to purchase a property valued at $275,000 at a 7.5% rate,” says Schuiteboer.
Lastly, many would-be homeowners are staying put due to the affordability crisis, meaning true starter homes are limited in supply.
And when they do come to market, they’re highly competitive. You’re not only competing against other potential homeowners but also property flippers eager to turn a quick profit on these properties.
How it affects parents housing their kids
For parents, this trend creates a boomerang effect on their finances. Parents in their 50s or early 60s are now forced to maintain full households rather than become empty nesters.
“These people have to cover extra expenses for utilities estimated at $200 to $400 per month, food, and insurance,” says Schuiteboer. This may derail retirement and other financial goals they might have.
Furthermore, some parents are unable to sell their spacious homes and move into smaller condominiums because they need to keep their homes affordable for their adult children.
“In one case, a family I worked with decided to renovate part of their home to create a separate living space for their adult child. That decision ultimately delayed their plans to move by several years,” adds Smith.
Why New Jersey is getting hit the hardest
New Jersey young adults are staying home because the math is, well, brutal.
Pricing is heavily driven by proximity to New York City. Markets like Hoboken, Jersey City, Montclair, and Summit remain some of the most competitive due to their location and commuter accessibility.
“In a state built around NYC jobs, the same economy that creates opportunity is also driving the affordability crisis. A lot of the hand wringing misses the point: This is the new normal in a high-cost commuter state,” says Nancy Chu, owner and team leader at Nancy Chu Homes in Livingston, NJ.
Chu explains that Gen Xers like her figured out Avenue C squats, four people splitting a one-bedroom in Flatbush, the second floor of a two-family in Weehawken, and still barely kept up with their student loans.
“We weren’t noble. We were broke and we made it work with what we had. The difference is we are now asking this generation to do the same thing at three times the cost, with two times debt or more,” Chu adds.
“We are in Livingston. Our son is finishing his freshman year. The plan has always been for him to finish school, spend a few years working, then graduate school, and yes, the house is there if he needs it. We made this world. The least we can do is stop judging the kids who are smart enough to use the tools we left them,” says Chu.
What young adults should do
If you’re between 18 and 34, understand that living at home is not necessarily a bad idea. When used strategically, it can actually allow you to achieve greater financial success.
“I often tell clients that living at home can be one of the most powerful financial tools available, if it’s used intentionally. The key is to treat it as a strategy, not a comfort zone,” says Smith.
Smith recommends setting a clear timeline and specific savings goals, automating savings, and getting pre-approved early so you understand your buying power.
“I also encourage buyers to think creatively about their first purchase. That could mean starting with a condo or even a small multifamily property where they can live in one unit and rent out the other,” Smith adds.
“The biggest mistake I see is waiting too long for the perfect situation. In many cases, getting into the market and starting to build equity is more important than timing everything perfectly.”
At the end of the day, young adults moving in with their parents isn’t just a housing trend. It reflects a broader shift in how this generation approaches money, independence, and long-term planning.
“The young adults who use this time at home strategically saving, planning, and preparing are putting themselves in a strong position to build real wealth through homeownership when they’re ready to make that move,” explains Smith.
