High mortgage rates cause new trend of young adults moving back in with their parents to save money
PHILADELPHIA - Since mortgage rates have hit their highest level in more than two decades, a new trend has started where young adults are opting to move back in with their parents.
Though many homes are up for sale, lots of young adults are choosing to live at home with their parents in order to save money to buy those houses.
FOX 29’s Greg Payne spoke to Damon Pace, owner of A Professional Pace Barbershop in Glassboro, New Jersey, and on top of cutting hair for about 20 years and being in a barbershop for 14 years, Pace has been trying to purchase a property.
"I don’t have your traditional W-2s, so it has to go off my taxes and I needed a payment plan letter from the IRS to purchase my property," said Pace.
Once COVID hit, Pace waited for the IRS to open back up, but months later he said the market was in a completely different spot.
"You’re going from March to August, now the market everybody is overbidding $20 to $30 thousand over asking," said Pace. "I finally found a house I had to go over about $17,000 over asking price to get my property."
Thanks to moving back home with his family for three years, he was then able to save his earnings from cutting hair, in order to buy his home.
"I wouldn’t have been able to save up the money that I needed as fast as I needed without being in my mom’s house." said Pace.
Brokers and realtors like Lisa Risco from Keller Williams Main Line in Ardmore, PA, say this saving tactic is being used a lot more often.
"The lack of affordability is what I consider the crazy part because people go to college, they get out of school they want to buy that first home and then wow here we are." said Risco.
Adult kids are moving in with parents to save for homes, survey reveals
The rate on the 30-year fixed mortgage now stands at 7.63%.
According to a recent survey from Realtor.com and Censuswide, more than half of people who are ready to purchase a home within the next 12 years are looking to their parents for help. Nearly 30 percent say they’ve already moved into their parents’ home to start saving. While 20 percent say they would consider doing so.
FOX 29’s Greg Payne also spoke with Amy Fizzano-Krauter, VP of Sales, Fizzano Family of Associates in Media, PA, who also teaches a class with young home buyers and encourages them to stay focused.
"Just make sure when you are home, you’re doing what you were there to do and saving the money to ultimately purchase a home." said Fizzano-Krauter. "It’s about discipline, you got to be discipline in order to do whatever it is you want to do and that’s with anything in life."