Failure to launch into household formation: Record 36 percent of young Americans (18 to 31) living at home with parents. Where is household formation coming from?

The notion that the housing market is surging because of young Americans buying up homes to form households is simply incorrect.  The housing market is rising like an artificial phoenix built on Wall Street’s insatiable appetite to leverage easy money from the Fed and investors.  If we look at data regarding young household formation we actually find that a record number and percentage of young Americans are living at home into their 30s.  Many look at places like Italy with cultural norms that favor children living at home into older ages and think that somehow, Americans are very different.  Well apparently this isn’t the case when we look at the numbers.  The economy has been very tough on young Americans and the lack of household formation in this group simply reflects constrained finances for this group.

Record number of young living at home
A recent Pew study had some troubling figures regarding the number of young Americans living at home:

Source:  Pew, via ZH
Going back to 1968 this is a record number of Americans living at home between the ages of 18 and 31 (this translates to 21 million Americans).  Keep in mind this applies for both renting and buying.  This data flies in the face of the meme that housing is recovering because of an across the board jump in household formation.  A large part of the housing market’s surge has come because of investor money and a market where supply has been stifled by banking charades brought on by suspending accounting rules.
Yet the above chart highlights that young Americans are having a tough time launching their own economic lives.  We have been conditioned that each subsequent generation would have it better than the previous one.  It is become more apparent on the financial front that this generation will have it tougher.
This decline in household formation is a new one:

We are going back a generation here.  A lack of financial security but also massive amounts of student debt are stifling the financial lives of many young Americans.  Why would someone take on a mortgage when they are already carrying on student debt that rivals that of a home loan?  Financial necessity seems to be the bigger reason many younger Americans are living at home versus a desire to stay with mom and dad into your early 30s.  American culture is fiercely independent so it is unlikely that we’ve suddenly decided that we want larger families under one roof.  Economic necessity is driving this.  Maybe with time this perception will evolve but that is not the case in the current environment.
Household formation and housing starts
Household formation has picked up from the depths of the recession but where is this growth really coming from?

You’ll notice that since 2008 we’ve been at a very slow pace for household formation.  Given that household formation is not coming from those 18 to 31 you have to wonder what other groups are contributing here.  Since many investors are buying up properties to rent out you actually have many people transitioning into rentals.  This constitutes a household being formed but not someone actually buying a home for their family as the media likes to perceive this housing recovery.
Of course the above requires looking at multiple data sources and trying to figure out a bigger trend.  Household formation for young Americans has been falling yet household formation has picked up overall since the lows of the recession.  From where?  What is the impact of large investors dominating the real estate market with easy Fed money?  It is rather obvious that this recession has caused a failure to launch for many younger people in the US.