The Great Recession may be in the rear-view mirror, but its effects on household formation are still being felt. According to researchers, 1.2 million more adults live with their parents than just eight years ago.

The trend, which has young adults boomeranging back into their parents’ houses for credit- and job-related reasons, not only is changing the way people live, it’s also creating a significant impact on the housing industry.

For one thing, we see it reflected in housing design. House layouts designed for multiple generations co-existing under one roof are placing a heightened priority on more private areas for independent living. Some multi-generational layouts offer two master suites, while others feature a den or a family room that can be converted into a bedroom and bathroom on the first floor. Still others include additional flex spaces and separate casitas to accommodate a wide variety of living situations.

Second, industry watchers say this demographic shift is causing significant pent-up housing demand that is due to be unleashed. Even so, the effect on homeownership rates and construction starts most likely will not be felt by the homebuilding industry immediately. “Most of these young adults will rent first, except for those who have taken this time living with Mom and Dad to save up for a down payment,” writes Chris Porter, chief demographer for John Burns Real Estate Consulting, in a recent building-market intelligence newsletter.

According to Porter, nearly 4 percent of U.S. households had an oldest child aged 25-34 living at home in 2012, compared to 2006, when 3 percent of households fit this category. While the jump from 3 percent to 4 percent may not seem significant, it amounts to the addition of 1.2 million households living in this configuration since the end of the recession.

And, says Porter, the trend is not confined to people under 35. The share of U.S. households with an oldest child aged 35 or older living at home is around 3 percent and has been rising, as well.

Influenced by declining employment, rising college enrollment and a tendency to put off marriage, this Millennial generation is considered a major contributor to sluggish household formation rates – a reality Porter doesn’t foresee changing any time soon. “Today’s young adults have achieved homeownership at a lower rate than their parents at the same age, and we believe that they will continue to do so for some time.”

(Editor’s Note: Andy Warren is president of Maracay Homes, the Arizona subsidiary of the Weyerhaeuser Real Estate Company.  He serves on the Board of Directors and as an Executive Committee member with the Greater Phoenix Economic Council and is a past board member of the Home Builders Association of Central Arizona.  He is also a member of Greater Phoenix Leadership and an active member of the Urban Land Institute.)

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