Among the scads of obstacles stymying homeownership goals, student loan debt remains one of the most prominent, and as the cost of tuition steadily increases, the American dream could drift further from reach not only for millennials but for Generation Z — the newest, youngest members of the potential renters and homeowners club.
Student loan debt can be attributed to more than just courses and books: The cost of dorm room living can run as high as $8,887 to $21,804 per year, and it’s only going up in some campuses.
Instead of incurring such a sizable housing expense that returns no profit and drains the student pocketbook, could it be more reasonable to pour those funds into real estate — a real home, a real investment?
This question was the basis for Redfin’s latest study, which compared the monthly dorm rate at 195 U.S. public colleges with the median monthly mortgage for a condo in each of those cities.
The list is comprised of the 15 most popular colleges according to enrollment, which means there’s a hefty number of students looking for housing in those cities each year.
Tuscan’s University of Arizona — where the average monthly mortgage for a condo ($545) is $266 cheaper than the monthly cost of a dorm ($811) — topped the list, followed by Georgia State University in Atlanta and the University of South Carolina–Columbia, where owners can save $23 and $160 a month, respectively.
Rounding out the top five were Ohio’s Kent State University at Kent and Louisiana State University and Agricultural & Mechanical College, where students can save $87 and $105 per month, respectively, should they choose to buy.
Redfin agent Misty Hurley noted that tight inventory means that college-aged buyers could face stiff competition, however, as reasonably priced homes fly off the market.Gains, gains, gains
Whether you’re looking to find a new niche market or simply add to your client list, these students (or their parents) could present a service opportunity for agents.
“Homeownership can be a great way to build wealth,” said Hurley. “Students will build equity that they can one day use as a down payment on a move-up home or to pay off student loans. If they choose not to sell right away, they’ll have a piece of property that’s ripe for renting, as there are always new college students looking for rentals.”
Forming a relationship with these young buyers and their parents early on could be the difference between a small one-time sale and a lifelong relationship that breeds many profitable transactions.
As these students reach different stages in life — relocating, marriage, children, retirement, etc. — they’ll need an agent to help them through the upgrades, the down-sizing, the investing and all the moves in between.
Associate Broker at Integrity Real Estate Group Cindy Jones invested in a property for her own college-bound son: “I bought a condo the second year my son was in college,” she wrote in the Facebook Group Inman Coast to Coast.
“His roommates paid rent, we did individual leases co-signed by the parents, which paid the mortgage. When he graduated another parent bought it at a small but nice profit,” she added.
If you do decide to work with this young demographic, Jones says it’s important to understand the difference between buying a principal residence versus investment property. Educate your prospects and clients, explain their options and give them an idea of the potential return on investment if possible. Explain the value to both the parent and the student.
“It certainly is a good niche for agents who live in big college towns,” she said.
Jennifer Preddy Egbert, a top luxury producer in Boulder, Colorado, says people who skip the dorm for homeownership stand to benefit from equity gains.
And don’t think opportunity is scarce if your city didn’t make the list. Boulder didn’t.
“We see upwards [of] 14.5 percent equity gain in Boulder, with condos starting at $500,000,” Egbert said on Coast to Coast. “It’s customary for parents to buy their kids places here and make as much as they spent on tuition in that time.”
Source: click here