We attended our youngest’s college graduation earlier this month. Our daughter earned a double major, with honors, from UC Santa Barbara and now embarks on the next chapter in her great life adventure. She’s smart and savvy, hard-working and personable and we know she’s going to be a great success. She’s now well on her way and completely off her parents’ payroll!

But that’s not the story for every Gen Z’er (aka Zillennials, those born 1996-2010 – the older segment of this cohort is aged 22-27) or Millennials (those born 1981-1996 – the younger segment of this cohort is aged 27-32). These young adults, especially those in their early-20s to mid-30s, are setting a record – for moving back in with their parents. And many don’t seem to be in a great hurry to move out!

A 2021 Pew Research Center study found that 25% of U.S. adults aged 25 to 34 were living in a multigenerational home; in 2011, just 20% were. In 1971, the number was only 9%. The number of “boomerang” kids has declined a bit since the 2021 pandemic-related peak but not much – last year, 19% of 25-34-year-old men and 12% of women were living with their parents. A 2022 poll by the Harris poll, commissioned by Daily Pay, a financial services company, had a startling find: 54% of Gen Z are choosing to live with their parents.

The reasons abound. While inflation and economic stress are driving the trend, there are various other contributing factors. The pandemic was certainly a catalyst – a Zillow analysis found that 2.7 million U.S. young adults moved in with a parent in March or April 2020. And it can be challenging to relaunch: We’ve seen research suggesting that two-thirds of pandemic-era boomerang kids are still living with Mom and Dad. But Covid-19 is now in the rearview mirror and lots of young people are still camped out at home, raiding the pantry, and using up the laundry detergent. What gives?

Today, we still have several demographic, societal and economic trends contributing to the rising number of young people living with their parents. Much has been written about younger people delaying marriage and family formation. The younger generations are having fewer children (if they have any at all) and are more content renting an apartment as compared with purchasing a home. As a society, we’re not as excited about ownership as previously – be it a car, primary residence or vacation home. This trend is particularly pronounced with younger people, some of whom are content to leverage their parents’ washers and dryers rather than schlep to the laundromat. Some generous parents foot the bill for groceries and charge no rent, allowing their kids to pay down debt and boost savings.

Who says there’s no free lunch?

The consumer website Savings.com found that 62% of adult children living with parents “don’t contribute at all to the household expenses.” Some parents have themselves to blame. Kids who were enabled in an era of participation trophies may not feel the need to carry their end of the log. Data showing that 10% of adult children still collect an allowance drives home that point!

It’s one thing for a directed young person to live at home, save money, repay debt, and prepare to relaunch. It’s been a challenge these past few years with the pandemic and high inflation is another financial obstacle. It’s quite another matter to fail to launch because junior just doesn’t want to go out and get a job.

It’s tough out there.

At first blush, the economy looks strong. After all, the unemployment rate is at a 40-year low. However, many jobs are lower-paying, service positions and it’s tough to pay the bills on $15-$20 hourly wages – which leaves little left over after restaurant meals, bar tabs and travel. There’s certainly not much remaining for savings in an era of dreadfully low home affordability. While it costs much less to rent than to own (35%-60% less, depending on apartment type, in Pathfinder’s markets), renting is also out of reach for many in more expensive, coastal cities for those with lower incomes – even if they are doubled up. Living with mom and dad allows a young person to save money but returning from college to the old twin bed is probably no walk in the park for most 20- and 30-somethings.

When interviewed, some young adults admit they’re just not ready to “adult”. Nada Torbica, a 23-year-old from Boca Raton, FL who graduated in 2022 with a degree in Industrial Engineering from the University of Florida, listed the pros of living at home in a TikTok video that hit nearly a million views: “You work to save 100% of your paychecks. Free meals, can spend paychecks on traveling, get to live with family dog, no real adult responsibilities.”

Not all parents are thrilled with it.

Some parents are thrilled to have their kids back at home. My wife and I enjoyed having our son, 25 at the time, with us during the pandemic summer of 2020. All good things must come to end; after three months, we all agreed that it was time for him to return to L.A. to his own apartment.

A December 2022 Pew survey found that 40% of dads believe parents hosting adult children is bad for society while only 12% think it’s a good thing. Moms concur – to a lesser extent. (For those of you looking to bone up on this issue or to prepare for challenging conversations ahead, there are lots of online resources and articles, including this gem: “How to Get Your Grown Children to Move Out.”)

There are larger forces at work.

Most young people would prefer to be independent just like most parents got used to being empty nesters and aren’t pining to return to setting the ground rules or another place at the dinner table. If these living trends were driven by strong multigenerational factors, like one sees in Europe, it would be one thing. But that’s not really what’s at work. The recipe behind this seems to be three parts economic pressures, one part convenience (laziness?) with a few sprinkles of parental enabling.

One thing seems apparent: millions of young people living with their parents is a coiled spring for the housing market – when these kids finally move out next month or next year, they’ll create considerable additional demand for apartments.

Mitch Siegler is Senior Managing Director of Pathfinder Partners. Prior to co-founding Pathfinder in 2006, Mitch founded and served as CEO of several companies and was a partner with an investment banking and venture capital firm. He can be reached at msiegler@pathfinderfunds.com.