If you want to help the local economy, shoo those in their 20s out of the family home. That's the unstated message of a study by Kelly Cunningham of the National University System Institute for Policy Research.
One thing dragging down the San Diego economy is the historically low household formation, says Cunningham. This dents the construction, finance, insurance, and real estate industries.
In recent years, more young people in their 20s cannot afford to move out of the family home because they are burdened by college debt and can't find a decent-paying job. Similarly, families and individuals doubling up (occupying the same home) holds down the homebuilding industry, which has historically been integral to the county's economy.
During the Great Recession and its weak aftermath, San Diego's average household size rose to 2.8, up from the historic level of 2.7, explains Cunningham. Because of this rise in average household size, for every population increase of 1000, the region needs 130 fewer homes than if the level were at the typical 2.7.
Prior to the Great Recession, there were more than 90,000 people employed in construction; that was down to 64,200 in April of this year. Similarly, at the peak, 84,000 were employed in finance, insurance, and real estate; in April, that number was down to 66,800.
The metro area's population has grown by 129,926 since the Great Recession, an increase of 4.2 percent. But household formations have only grown 1.7 percent. So, those working in industries related to housing are finding it harder to get jobs.
"Lower household formation, high unemployment, and tightened lending standards crushed the local residential building economy," says Cunningham.