WASHINGTON — Young adults in the nation’s most expensive housing markets are increasingly unable to afford homes of their own, with a new Urban Institute analysis finding a widening divide between high- and low-cost metropolitan areas in the share of adults ages 25 to 34 who continue to live with their parents.
About 20% of Americans in that age group now live with their parents, up from 11.8% in 2005, according to the report. Researchers found that young adults in high-cost metropolitan areas are substantially more likely to remain at home, pointing to rising rents and limited housing supply as significant barriers to forming independent households.
The analysis, by Urban Institute researchers Jun Zhu, Jung Hyun Choi and Laurie Goodman, found that the geographic divide has grown sharply over the past two decades.
In 2005, the difference between the share of young adults living with parents in high-cost and low-cost metropolitan areas was just 0.2 percentage points. By 2024, it had grown to 5.8 percentage points.
The change coincided with sharply rising rents, particularly in already expensive markets.
Between 2005 and 2024, the inflation-adjusted median rent for a two-bedroom apartment in high-cost metropolitan areas increased 29%, from $1,289 to $1,660, according to the analysis. Rents in low-cost metropolitan areas increased 17% over the same period.
The percentage of young adults living with parents increased across the country following the Great Recession and peaked nationally at 22.8% in 2017.
But the increase was considerably larger in expensive housing markets.
In 2017, 26.3% of adults ages 25 to 34 in high-cost metropolitan areas lived with their parents, compared with 18.7% in low-cost metropolitan areas.
Although the overall percentage has declined since then, researchers found that the geographic disparity has persisted. The share of young adults living with their parents also began increasing again after 2022 amid higher rents, elevated mortgage rates and increased uncertainty for younger workers.
The effects are particularly pronounced for young adults with lower incomes.
Among adults ages 25 to 34 earning less than $20,000 annually, 34.7% of those living in high-cost metropolitan areas remained with their parents in 2024, compared with 26.6% in low-cost areas.
The report found that income does not entirely eliminate the effect of expensive housing. Across every income category researchers examined, young adults living in high-cost metropolitan areas were more likely to live with their parents than people earning comparable incomes in lower-cost regions.
Researchers warned that the consequences can extend well beyond when someone first moves out.
Previous Urban Institute research has found that people who live with their parents during their late 20s and early 30s are less likely to establish independent households and become homeowners during the following decade.
Delaying homeownership can have longer-term consequences because purchasing a home later in life can reduce the amount of housing wealth a household accumulates before retirement.
The report identifies expanding housing supply as a key policy response, particularly in metropolitan areas where rents and home prices are highest.
Researchers pointed to zoning reforms that allow accessory dwelling units, duplexes and small multifamily buildings as one way to expand the supply of relatively lower-cost housing. They also identified faster and less complicated development approval processes as a way governments could reduce barriers to construction.
Those recommendations mirror a broader debate underway in California, where state lawmakers have increasingly overridden local restrictions on housing density and streamlined approvals in an effort to address a shortage that has pushed housing costs far above national averages.
California YIMBY, which advocates for increasing housing production and reducing local restrictions on development, highlighted the Urban Institute findings as evidence of the consequences of restrictive housing policies.
The organization said the widening difference between expensive and inexpensive metropolitan areas shows how housing costs are affecting younger adults’ ability to establish independent households.
The Urban Institute researchers also cautioned against relying exclusively on financial assistance to make housing affordable.
Rental assistance and down payment programs can help individual households, according to the analysis, but researchers found such policies are more effective when paired with efforts to increase housing supply.
When the number of available homes remains constrained, additional purchasing power can contribute to higher rents and home prices rather than substantially improving affordability.
The researchers suggested that policymakers consider the ability of young adults to form independent households as another measure of whether housing policies are working.
Housing policy is typically evaluated through measures such as rents, home prices, vacancy rates and the number of homes produced. The percentage of young adults able to move out of their parents’ homes could provide another measure of whether a region is producing housing that residents can afford.
The findings also raise broader questions about how housing costs affect migration, marriage and family formation.
Young adults unable to afford housing in expensive metropolitan areas may remain with their parents longer, move to less expensive regions or postpone other major life decisions.
The report concludes that reducing those barriers will require more than helping households compete for a limited number of homes. In the country’s most expensive housing markets, researchers found that expanding the housing supply — including smaller and less expensive housing types — is an important part of allowing younger adults to establish households of their own.
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