By Nathalie Voit
About one in three U.S. adults between 18 and 25 still live at home with their parents, a recent report from Credit Karma found.
The findings, released on June 28, show how high inflation, record-high housing prices, and excess spending have hindered Gen Z’s ability to save. Housing costs, in particular, have fueled a “failure to launch” among Gen Z.
According to the Credit Karma report, twenty-nine percent of zoomers live with their parents or relatives as a long-term solution to the cost-of-living crisis. Of those who did flee the nest, 32% spend half of their monthly income on rent or mortgage payments (most experts suggest spending no more than 30% of your monthly income on rent).
The average monthly amount Zoomers pay for housing is $1,060. This is less than the national average rent price of $1,295 but still too much for a generational cohort that largely earns under $50,000 a year.
About 37% of Zoomers receive financial help from family or friends to pay for housing.
The record amount of money spent on housing has hindered Gen Z’s ability to save for other long-term needs like retirement. According to the report, 28% of respondents cannot save money at the moment, with most citing inflation as the reason they cannot build an emergency fund.
Other reasons given by zoomers for being unable to save include not earning enough money (47%), income not keeping pace with inflation (40%), and rising rent prices (39%).
The average Gen Z respondent currently has $1,375 in savings–just enough to pay their next rent payment.
Twenty percent of Zoomers who have struggled to save admitted to overspending on discretionary items and wants like shopping, travel, and concert tickets.
“Right now, many zoomers, especially recent graduates, are attempting to make their first real transition into adulthood. For some, that includes starting their first job or moving to a new city, and for others, that means simply moving out of their family home,” Consumer Financial Advocate at Credit Karma Colleen McCreary said in the report.
“However, each of these major milestones come at a cost, which are driven up by current economic conditions, making it harder than ever for young people to become financially independent. If there’s one silver lining, it’s this: Gen Z is entering one of the best job markets in recent history and that means they have the ability to ask for what they need when it comes to salary and benefits – within reason.”
The news comes as multifamily asking rents rose a record 11.3% over the year in 2021, the highest rate of change ever recorded, according to research from real estate market analytics firm CoStar. At the same time, housing prices posted their biggest annual home price gain in 34 years, rising 18.8% in 2021 to $346,900, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index.
