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More Americans leave parental nest in boost for housing
Lucia Mutikani / Reuters / January 18, 2013
Americans are feeling increasingly confident in the future and more and more are striking out to set up their own homes, a move that is helping propel the housing recovery.
The deep financial crisis and recession of 2007-2009 kept many Americans from leaving their parents’ nests and drove others back into them, putting a sharp brake on the pace at which new households formed.
Household growth averaged about 500,000 per year from 2008 through 2010 – less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947.
But the rate at which individuals or families are getting their own homes picked up over the past two years, underpinned by a steady if tepid economic recovery and gradual labor market gains. In 2011, households increased 1.1 million and they grew closer to 1.2 million last year.
“The rise in household formation bodes well for the housing recovery. Instead of having too many houses, we are turning to a situation where there aren’t enough,” said Guy Berger a U.S. economist at RBS in Stamford, Connecticut.
Indeed, housing has turned from the economy’s sorest spot to its brightest, with new building activity at 4-1/2-year highs. Housing activity in turn spurs related areas like furniture.
That is because of people like Linna Chhean. After graduating from college in May 2007, she moved back in with her parents, helping out in a family-run business.
The 27-year-old finally moved into her own one-bedroom apartment four weeks ago after she was hired as a designer in the Dallas offices of a global public relations firm.
“I wanted to get a job in my field, which is art. I was working for them in a convenience store, which is not what I wanted to do at all,” said Chhean.