With the rent being too damn high, many Americans are now opting to live with a roommate (or two or three in the case of San Francisco and Los Angeles). We now have a record number of adult Americans living with roommates. This coincides with a stagnant growth in the homeownership rate especially in crap shack intensive areas like SoCal. The market continues to be constrained by low supply and Taco Tuesday baby boomers living in properties that they would not be able to purchase today at current price levels. Many older home owners bought during an era where one income (even one blue collar income) was enough to purchase a home. That is no longer the case in many metro areas where dual income professionals and all cash buyers are the dominant buying force. So how many adult Americans are now living with roommates?
As it turns out, many people are dealing with high rents by finding roommates:
“(Zillow) As rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults—aged 23 to 65—live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.”
So much for the affordability argument. Living like sardines is the new solution. And this is a record number of adult Americans living with roommates. And no, this isn’t looking at married people or couples:
“We define a doubled-up household as one in which at least two working-age, unmarried or un-partnered adults live together. For example, a 25-year-old son living with his middle-aged parents would constitute a doubled-up household, as would two 23-year-old roommates who are not partnered to each other. A doubled-up household contains people who might choose to live apart under different circumstances, financial or otherwise.”
And of course the rates are much higher in expensive areas like Los Angeles:
I’ve driven around many cities in SoCal and you see streets packed with cars and in some other areas you see five to six cars in places were only two to three cars should go. So you see this congestion already taking place. The idea of having a big lawn and open space just doesn’t fit in with our crowded market. In SoCal we have 22,000,000+ people all trying to live within 100 miles of the coast. And you feel this in the massive traffic in various cities.
Is this sustainable? As we have noted, much of the new housing construction is catering to the new needs of Millennials which is rental apartments or condos which are glorified apartments with mortgages. Sure, you have some Millennials wanting to be Taco Tuesday baby boomers version 2.0 but the stats don’t highlight this. First, many are marrying later if they are marrying at all. Also, the size of a family today is much smaller. So why the need for insane McMansions? The needs are clearly different.
You also see this being reflected in roommate changes. Millennials are more open (obviously) to living with others. But this trend of rooming up is hitting all groups. So this is being driven by necessity and lifestyle choices. For example, a Millennial might be happier living in San Francisco with roommates versus having a McMansion out in Oklahoma.
One way to cut housing costs is to get roommates. An old fashioned solution to the high rental cost situation.