Staying at home longer to become homeowners?

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by Martin Turcotte

What you need to know about this study
The age of leaving home and home ownership
Leaving home before the age of 16
Boomerang kids and home ownership
Summary

It is no longer news that young adults, on average, remain at home longer and are more likely to return after leaving. Demographers and sociologists have presented various explanations for these two trends, including the prolonged period of formal education and the accumulation of debt, the temporary nature of the jobs often held by young people, delayed formation of couples, changes in values and preferences, and so on.

More recently, the media and the popular press¹ have suggested another explanation: many young adults are living with their parents longer (or returning after their initial departure) in order to save so they can purchase their own home when they eventually leave their parents' home. Staying with their parents longer, or returning to the nest after a first departure, is thus a strategy for accessing home ownership more easily.

How closely do these theories reflect reality? Are young people who stay in the family home longer really more likely to purchase a home? And what about "boomerang kids" – those who return to live with their parents after initially leaving? Using data from the 2006 General Social Survey (GSS) on family transitions, this article examines whether there is a link between the age at which young people leave the family home, and the likelihood that they become homeowners in their 30s. To do so, it will consider various factors highlighted in past research as influences on access to home ownership.

The age of leaving home and home ownership

The likelihood of becoming a homeowner increases in relation to the age at which the person left home, but only to a certain point (Chart 1). In fact, for those who left home after the age of 25, the likelihood of becoming a homeowner in their 30s seems to decrease. The two groups that stand out most clearly, having the lowest rate of home ownership, are those who left the family home very early (at age 16 or 17) and those who left later (at age 28 to 30).

This conclusion remains exactly the same even after using a statistical model to hold constant the various factors associated with the probability of becoming a homeowner, such as household living arrangements, income and so on² (Table A.1). There is a positive relationship between leaving the family home at a later age and home ownership. However, contrary to the idea that a person's chances of being a homeowner increase the longer they remain in the parental home, the likelihood of home ownership increases only to a certain point.³ After the age of departure reaches about 25, the predicted probability of home ownership changes direction and begins to fall, although to a lesser extent (Chart 2).

Based on these results, it appears that the age of departure from the family home, although far from being the most significant factor, can make a difference in terms of access to home ownership. This is especially true for early departures, which are associated with a lower rate of home ownership. For later departures – that is, those that occur in the mid-20s – it seems that other factors such as income, marital status, and so on take the lead. In short, these results partially confirm the idea that leaving the family home at a later age increases the possibility of subsequently becoming a homeowner.

Boomerang kids and home ownership

According to a recent survey, a large number of young adults return to live with their parents because they want to save for their first house.⁴  If that is the case, one would expect that boomerang kids now living on their own should be more likely to own their own homes than those who left home only once. However, that's not how it works.

In fact, the proportion of boomerang kids aged 30 to 39 who owned their own home (68%) was not statistically different than that for those who had left the parental home only once. Furthermore, the statistical model shows that, when other factors are held constant, the odds of boomerang kids being homeowners were less than those in their 30s who had left the family home and never returned (Table A.1).⁵

There are several reasons why young adults may return to live with their parents after initially leaving. These may include divorce, loss of employment or temporary financial problems. To adequately understand the relationship between being a boomerang kid and the likelihood of being a homeowner, the reasons behind a young adult's return to the family home must be included in the analysis.

Boomerang kids are not all equal in terms of access to home ownership. Those who returned to live with their parents because of loss of employment or for financial reasons were much less likely to be homeowners in their 30s than those who never returned.

However, holding the effect of the other factors constant, persons who "boomeranged" because a relationship ended or because they finished their studies were no less likely to become homeowners than those who never returned to live with their parents.⁶

Summary

This study has uncovered a positive association between the age at which young adults leave the family home and the likelihood of them becoming homeowners in their 30s. However, this finding is true only until a person reaches their mid-20s. Beyond about age 25, the later their departure, the lower their probability of being a homeowner themselves in their 30s.

Furthermore, it seems that boomerang kids who return to live with their parents after initially leaving, are less likely to be homeowners in their 30s than those who left the family home only once. This is especially the case among persons who came back to live with their parents because they lost their jobs or were having financial problems.

Martin Turcotte is a social sciences researcher with Social and Aboriginal Statistics Division, Statistics Canada.

Notes

1. Boyle, Theresa. 2007. "Kids hang in with parents to raise a down payment", Toronto Star, April 28.
   El Nasser, Haya. 2005. "Why grown kids come home" USA Today, http://www.usatoday.com/news/nation/2005-01-10-cover-kids_x.htm, website checked on July 6, 2007; "Boomerang kids," Canadian Living, September 2004.
2. For a description of the various factors that were included in this analysis, see Turcotte, Martin. 2007. " Young people's access to home ownership," Canadian Social Trends, Catalogue no. 11-008-XIE, no.84.
3. The predicted probabilities in Chart 2 were estimated holding the other factors included in the statistical analysis constant, so that they correspond to the profile of a "typical individual." This "typical person" had the following characteristics: a 35-year-old man with a household income between $50,000 and $59,999, who had completed a college diploma, held a permanent position and lived in the Toronto CMA.
4. BMO Financial Group. 2007. Reality Bites: Generation Y Moving Home to Break into the Real Estate Market. Unprecedented number of 21 to 34 year olds living with mom and dad. News release, April 17, 2007. www.bmo.com (accessed on October 24, 2007).
5. If the reference population is changed to include only adults aged 35 to 44 (and if we consider the fact that certain persons return to live with their parents after the age of 30), the conclusions remain exactly the same: boomerang kids are less likely to own their own homes than those who left the family home only once.
6. The difference from the group of people who never returned home to live with their parents was not statistically significant in the logistic regression analysis.