Real Estate Flourishes in College Towns Despite Economic Downturn
|November 11, 2010||Posted by Sandie under Announcements, Real Estate|
Coldwell Banker recently came out with a new real estate survey that finds interesting trends in the real estate markets of college towns. The College Home Listing Report shows both the most affordable and most expensive college-town markets and gives insights into the factors that drive the real estate market in university hubs.
Real estate markets in college towns have benefitted from “parent investors” who buy property in the city where their child attends school instead of paying for room and board.
The survey finds that about 64 percent of real estate agents report large numbers of parents investing in homes where their children can live while attending college. According to Jim Gillespie, CEO of Coldwell Banker, “Interest in college towns is always going to be high, especially for people who once went to school there – and people are seeing value in this investment.”
Despite the economic downturn of recent years, interest in the college real estate market has not suffered. This type of investment continues to play a prominent role in the overall market for real estate in these areas. Seventy-three percent of those surveyed see a significant number of people buying homes near campus and renting them over the last few years, while only 21 percent note a decrease in the number of investors buying properties in this manner.
“Our survey suggests two types of investors see value in college towns,” Gillespie said. “Long-term investors take advantage of the steady stream of renters, including students, professors and university officials. ’Parent investors’ buy homes for their child to live in while attending college. Roommates provide rental income for the mortgage, and the hope is that students care for the home and it appreciates over time.”
Parents see purchasing a home in their child’s college town as a financially responsible decision. The cost of room and board for the 2010-2011 school year has increased by 4.6 percent for public schools and almost 4 percent for private universities according to the College Board.
It is not just strategic investors that want to purchase property in college towns. Alumni and retirees also flock back to their alma matters. According to the survey, 51 percent of respondents cited a large amount of alumni homebuyers. Forty-nine percent saw a significant amount of retirees moving to town as well.
Gillespie recently bought a 3-bedroom townhome for $120,000 near his old alma matter, the University of Illinois. He leaves his home in New Jersey several times a year to cheer on the Fighting Illini, and will likely retire to the Champaign home when the time comes.
To see the full report, click here.