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Stagnant incomes and rising rents left the U.S. with an unprecedented number of doubled-up households as people moved in together to make ends meet. All those roommates have changed the American housing landscape, with 5.4 million households that would exist under normal conditions instead lost in guestrooms and basements, sharing space with friends, family and roommates, waiting for better economic times, according to an analysis by Zillow.
More than a third of working adults are living in doubled-up households, driving the median household size up to 1.83 adults in 2012 from 1.75 in 2000. The phenomenon is concentrated in markets where rent has most outpaced income, notably in California and Florida.
In the Riverside, Calif. metro area, under normal conditions, there would be 12.6 percent more households. In the Miami metro, more than 230,000 households—11.3 percent more households than currently exist—were lost as people doubled up.
As the housing market becomes friendlier for buyers and the economic recovery continues, those lost households could represent a significant source of pent-up demand in the market as they begin to look for a new place to live.
"The rise in doubled-up households is a troubling sign of the times and starkly illustrates one of the prime drivers behind weak home sales these days," said Zillow Chief Economist Dr. Stan Humphries. "But there is a silver lining behind this data. Like a coiled spring, all of these doubled-up households represent tremendous potential energy for the market. If and when these compressed households begin to unwind and these millions of Americans do start to create their own households, demand will bounce back, possibly even causing household growth to outpace population growth. That added demand will, in turn, create more incentive for builders to construct more homes, and will help unblock the market. There is no magic bullet, but continued home affordability, an increasing supply of both for-rent and for-sale homes and the potential for incomes to grow more quickly as the economy recovers will all help the market to realize this potential."
The median income of adults in doubled-up households in the U.S. has risen over time, from a median of $24,000 in 2000 to $29,000 in 2012, but people in doubled-up households have incomes that, increasingly, lag behind median incomes overall. On average, doubled-up adults make 76 percent of the median income of people without roommates, which means it can take longer to save up for a down payment or deposit on a place of their own.