More and more adult Californians are living with their parents, according to a study by UCLA and the Insight Center for Community Economic Development. The study found that 2.3 million adult Californians were still residing in their parents’ homes in 2011, compared to 1.8 million adults before the recession.
As a result, there has been less demand for items associated with the home, such as furnishings, appliances and home and garden supplies. In the meantime, “household formation” has not returned to pre-recession levels. The housing market’s immediate future looks bleak, as there are fewer first-time buyers, thus leading to less home construction.
The average number of new households created yearly nationwide has dwindled from 1.2 million new households over the past five decades to 650,000 each of the last five years to 160,000 in 2013. In Los Angeles, the number fell from 13,000 households yearly from 1991 through 2008 to 6,800 households yearly after that. In the larger region of Southern California, the numbers descended from almost 45,000 a year to 16,400 yearly since 2008.
The National Association of Home Builders reported in February that the percentage of 25- to 34-year-olds living with their parents rose to 19% in 2012, when it had been 12% from 1990 through 2005.
According to Jed Kolko, Trulia’s chief economist, “In Orange County, for instance, 60 percent of new construction activity in 2013 was multiunit buildings, rather than single-family homes.”