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Young adults are leaving the nest

As the job market improves, more are renting and buying their own places.

December 09, 2012|Don Lee
  • “It feels good to get out and be on my own again,” says Kevin Ratz, 27, who recently moved out of his parents' suburban Detroit home, where he had stayed for the last two years.
“It feels good to get out and be on my own again,” says Kevin… (José M. Osorio, Chicago…)

WASHINGTON — After riding out the tough economy in their parents' basements, more young American adults are starting to break out on their own, pushing up the nation's mobility rate and giving an important boost to the housing market and the broader recovery.

Thanks to improving job prospects and super-low mortgage rates, adults in their 20s and early 30s are moving into their own apartments and buying homes in increasingly greater numbers, according to real estate experts and government statistics.

For The Record
Los Angeles Times Tuesday, December 11, 2012 Home Edition Main News Part A Page 4 News Desk 2 inches; 75 words Type of Material: Correction
Young adults: An article in the Dec. 9 Section A about young adults moving out of their parents' homes said that, according to Brookings Institution demographer William Frey, the number of people in the 25-to-29 age group moving across state lines last year was the highest in 13 years. The statement attributed to Frey should have said the increase in the rate of people in that age group moving was the highest in 13 years.
For The Record
Los Angeles Times Sunday, December 16, 2012 Home Edition Main News Part A Page 4 News Desk 2 inches; 79 words Type of Material: Correction
Young adults: An article in the Dec. 9 Section A about young adults moving out of their parents' homes said that, according to Brookings Institution demographer William Frey, the number of people ages 25 to 29 who moved across state lines last year was the highest in 13 years. The statement attributed to Frey should have said that it was the increase in the rate of people in that age group moving that was the highest in 13 years.

Census Bureau data show that the nation added more than 2 million households in the 12 months that ended March 31, about triple the annual average for the previous four years. Most of the gain came from baby boomers, but young adults are hitting the road as well.

The recession had knocked overall U.S. interstate migration to a post-World War II low, but last year the number of people ages 25 to 29 who moved across state lines reached its highest level in 13 years, said William Frey, a demographer at the Brookings Institution.

Frey called the shift significant: "They're leading indicators of migration coming for the broader population."

Laurie Brown, 26, said she was "completely broke" when she moved back into her parents' house near Tahoe City, Calif., in early March 2011. She came home with college loans to pay and other debt from bouncing from one place to the next.

"At first, I thought I'd be there only two months," she said.

But Brown soon realized just how tough the job market was. She had a bachelor's degree, magna cum laude, in business communications from George Fox University in Newburg, Ore., but the best she could find after returning home was busing and waiting tables at a restaurant in Tahoe City.

"I was really humbled," she said. "It made me feel like I wasn't an adult, like you're back in high school." Once a week, she got together for happy hour with three high-school buddies who were all in the same boat: college graduates living at home again. "We were kind of a support group," she said.

Then in late April, after finding full-time work at a nonprofit youth development and literacy program in the Tahoe area, Brown moved into an apartment about 15 minutes from her parents' home.

"In some ways it was a blessing in disguise," she said of her 14 months living with her mother and father. Although it was hard at times to adjust, she said, "it was really nice to spend time with my parents. I was able to reconnect with them."

During the recession and slow recovery, young people better educated than their parents' generation have struggled to compete with older workers in a job market with several unemployed people for every opening. That compares with about two people unemployed for every job opening before the 2007-09 recession.

Without sufficient incomes, they delayed getting married and having children, and simply stayed where they could pay little or no rent.

The result was that 2 million more adults ages 18 to 34 were living under their parents' roofs last year than four years earlier, according to an analysis of census data by Timothy Dunne, an economist at the Federal Reserve Bank of Cleveland.

Over the last year, the jobless rate of those ages 25 to 34 has dropped a little more sharply than it has for the overall population. It fell to 7.9% in November from 9% at the start of the year, compared with a decline to 7.7% from 8.3% for all workers.

"With stronger economic fundamentals, the process will pick up speed," Dunne said. "I think there's pressure. Households can delay formation for only so long."

People tend to move long distances for new jobs.

A week ago, Kevin Ratz, 27, hitched a U-haul to his Ford pickup, loaded the trailer with furniture, stereo equipment and skis, and drove to Chicago.

Ratz left behind his parents' suburban Detroit home, where he had stayed in his childhood room for the last two years. The room was pretty much unchanged, with its sports-car posters on the wall and youth-hockey trophies lining the bookshelf.

One big reason he moved back in with his parents was the weak job market for young pilots. Although he had a degree in aviation from Western Michigan University and some experience as a flight instructor, he found few well-paying openings in the field.

So for the last two years, Ratz waited it out by working as a tour guide, saving what money he could and enjoying his mom's home cooking.

Recently he landed a job at a flight school in Chicago and took an apartment in the hip neighborhood of Wicker Park just north of downtown.

"It feels good to get out and be on my own again," Ratz said.

As more young adults go out on their own, one big question for the economy is: Will they rent or buy?

Many are deciding to rent because they can't afford to buy a home or are wary about the housing market. But there's a dwindling supply of available apartments in large cities, where young adults tend to settle. Builders have been slow to put up new units, pushing down vacancy rates and driving up rents.

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