December 19, 2022
Inflation concerns and record-high prices in rent, groceries, and other amenities have caused nearly half of all young adults (48%) between the ages of 18 and 29 to choose to live with their parents, a conglomerate of analysts found, citing data from the U.S. Census Bureau.
One sector that has benefited from the Millennial and the Gen Z decision to stay at home is luxury retailers, the report found, as young adults are spending less (or nothing) on rent and are then using the extra disposable income on higher-end brands of clothing and luxury items. Only one in five Millennials living at home say that their parents charge them rent. Of those, nearly half were paying less than $500 per month.
“When young adults free up their budget for daily necessities, they simply have more disposable income to be allocated to discretionary spending,” Aubin said in the report. “We see it as fundamentally positive for the [luxury] industry.”
“When asked about the incentives to move in with parents, 51% of the young adults said that it was to save money and 39% of them said that it was because they could not afford rent,” PropertyManagement.com said in a survey published on December 5.
The survey, conducted by Pollfish, included 1,200 Americans ages 26 to 41, and about one in four said they lived with a parent.
Aubin and his team of analysts found some of those polled also cited a desire to pursue higher education—using the cheaper rent option to help cover its costs—and intentionally choosing not to depart from their parental protection until their debts are paid off.
The analyst said developments in social media also have helped prompt the additional luxurious spending.”This is of course not the only reason luxury-goods consumers are getting younger in the West (social media also playing an important part), but we see it as fundamentally positive for the industry,” the analysts reported.
Other payment options for luxury goods, such as buy-now-pay-later have also facilitated the increase in high-end spending, according to Quartz.
The report found the figure of young adults staying at home is the highest it has been for decades. The 2022 figure, although down slightly from 2020 (49.5%), is the highest it has been dating back to the 1940s. The recent record was likely exacerbated by the COVID-19 pandemic.
Research contact: @FoxBusiness