Many young adults aged 25 to 39, referred to as "shadow buyers," are employed but still reside with their parents due to the overwhelming unaffordability of housing. Bright MLS Chief Economist Lisa Sturtevant's research indicates that housing costs have significantly outpaced income growth, making homeownership an unattainable goal for many, despite their employment.
Sturtevant's report highlights the severe income disparity. For example, in Los Angeles, an income of approximately $319,000 is required to purchase a median-priced home, yet the median wage for shadow buyers in the area is only $36,100. Similarly, in the D.C. area, shadow buyers typically earn $41,000, but need $180,000 to afford a median-priced home. This substantial gap is pushing many to consider more affordable regions or to remain in multigenerational living situations, which some attribute to cultural factors in addition to economic necessity.
The highest concentrations of shadow buyers are found in coastal states. Riverside, California, leads with 8.3% of households including shadow buyers, followed by Los Angeles at 7.8% and San Jose at 5.5%. In the Mid-Atlantic, Prince George’s County, Maryland, has an 8% share, while Prince William County, Virginia, has 7.1%. Despite common misconceptions, over 70% of these young adults are employed, indicating they are "more stuck than strategic" in their living situations.
Sturtevant believes that several factors must align to improve affordability for first-time homebuyers. She suggests a slight decrease in mortgage rates, a halt in the rapid growth of home prices, and income growth that surpasses housing costs. Without these changes, or a significant intergenerational transfer of wealth, she anticipates that these shadow buyers will remain out of the housing market for the foreseeable future, as even substantial rate cuts would not bridge the affordability gap in expensive areas like Los Angeles.
