Moving back home with mom and dad has become widely accepted among members of Generation Y (Gen Y) and their Baby Boomer (Boomer) parents, per the Pew Research Center. Dubbed the “Boomerang Generation,” three out of ten parents report their adult children have now moved back home.

For children in need of financial assistance, living with parents can provide an essential lifeline. Still, parents have benefitted from shared finances; 48% of Boomerang children report paying rent and 89% claim they help pay for other housing expenses. Thus, multi-generational living establishes financial ties rather than fostering economic dependency.

This data is especially relevant now, as multi-generational living is on the rise. Adults between the ages of 25 and 34 are the most likely to be living in these households, with 21.6% of young adults living in multi-generational homes as of 2010.

first tuesday take: Gen Y is less likely to own homes as a result of the country’s failure to provide jobs in both the private and government sectors. More than preceding generations, Gen Y members will have dwarfed careers due to years lost between completing college and attaining the job they should have had upon graduation, but for the recession and crisis.

Surprisingly, as Gen Y individuals pay off their student debt and find employment commensurate with their level of education, demand for ownership of single family residences (SFRs) will actually decrease. Gen Y will remain mobile and much more likely to rent than own when compared to the housing habits of their parents.

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A shift towards housing in denser, urban areas closer to professional jobs and cultural amenities will arise, with Gen Y leading the way. Their boomer parents on retirement will follow – to where the grandchildren are.  Suburban neighborhoods will be supported by lesser skilled, more low- to middle-income owners and tenants, reliant upon SFRs for shelter.

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In response to the lack of demand for ownership of SFR housing in what is characterized as a distressed housing market, multi-generational housing has provided a momentary fix for families still struggling with the joblessness of the Lesser Depression. However, once members of Gen Y are financially able to cut their ties, these individuals will gravitate towards cities for their centers of employment.

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City governments can act on this future trend now by establishing zoning policies to allow for the building of high density, high rise apartments and condos near urban employment areas with the higher paying jobs that are of interest to Gen Y.

Without a change in urban zoning restrictions, city living will experience soaring rental and sales prices as demand overpowers artificially suppressed supply. Ultimately, economic development will be stifled within the very cities that do not see this paradigm shift coming. When Gen Y is ready to leave the nest, will California be ready?

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Re: “The Boomerang Generation: Feeling OK about Living with Mom and Dad” from Pew Research Center