Tuesday | February 07, 2012
Students Choose Homeownership Over Campus Housing
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By
Lauren Caggiano
10 July 2007
Missy Apmann, 22, is a senior at the University of Dayton and already a landlord.
At an age when most 22-year-old college students are concerned mainly with academics and the party scene, Apmann juggles the demands of school, friends and home ownership. She is among the growing segment of students who own their houses while still in college. Each year more and more students are turning to an alternative option-buying a property for their own use or renting out a property during their college years.
University Housing Alternatives
Apmann resides at a house in the City of Oakwood, literally across from the university. A two-year-and-a-half year resident of Oakwood, she moved there in the spring of 2005 for several reasons, but primarily to escape a tense roommate situation. With the UD housing lottery imminent and her unpleasant living situation, her mother decided to look for alternatives to university housing. Apmann’s mother found the house on the market by sheer chance and made an offer soon after. In hindsight, she described the result as the "best outcome for the situation."
"It was more of my parents’ doing," Apmann said.
Jim Luckett, a real estate agent at a Dayton Coldwell Banker office, has experienced this trend firsthand. "There is a growing trend-more realtors have sold to UD students," he said.
Luckett also believes that the buyers’ market contributed to the growth of this movement toward home ownership. "When the market was very good, [parents] could have their son or daughter live in a house and save money," Luckett said.
Clintonville agent Katie McCann agrees. "It’s a relatively new trend, she said. It seems to be getting more popular."
Pros and Cons of Homeownership
McCann said tax benefits, privacy, and equity are the advantages to home ownership. Seconding the agents’ opinions about student-owned housing, Apmann said she enjoys the cleanliness and safety the neighborhood offers. "I can have my own time and go out when I want to," she said.
Although she is now a seasoned home-owner now, Apmann admitted that she, like many UD students, was ignorant of the reality of student home ownership until she became interested in the property. "It’s surprising. People do that?" she asked rhetorically.
Now as a homeowner, she must be responsible for the maintenance and utilities associated with home ownership, such as old plumbing and heating. Furthermore, she must obey Oakwood’s strict codes. In regards to routine demands, Apmann advises new student home owners to "expect little things" and to "be realistic."
Despite the initial appeal, the investment is not always as glamorous as it seems. But Apmann said she has no regrets about tackling this venture.
"It worked out perfectly, she said. "I’d recommend it."
But Apmann advises students to do their research before choosing a real estate agent. Also, although her experience has been pleasant, the overall satisfaction can vary, she said. "It depends on the house you move into," she said.
Student Homeownership Grows Nationally
Yet the appeal of student-owned housing is not concentrated to Ohio or the Midwest.
For a group of students in Austin, Texas, student-owned and student-run housing is the way to go. According to their Web site, www.collegehouses.org, "Unlike dorms or apartments owned by the university or a landlord, the students control the way in which co-ops operate. As such, cooperatives provide a style of living that easily facilitates the needs of our members: residential, academic and recreational."
On their Web site, the students list social and physical and economic benefits. Among them are the elimination of an outside landlord, a sense of community and democracy. The physical benefits include shared "maintenance responsibilities, a sense of freedom and mobility and good quality, modest housing." Equally, equity in ownership, affordability, and an overall savings is economically appealing. Likewise the shared food and labor duties reduce costs and workload.
The emergence of another Austin-based company, CollegeRealEstate.com, is also indicative of the widespread popularity of this trend. According to its Web site, "[CollegeRealEstate.com] is taking real estate to a completely new level. We accomplish this by offering students and their parents a unique opportunity to use the home buying and managing process as a classroom for learning real life principles and skills."
With the cost of room and board going up 5 percent annually, "It’s starting to make more sense for students to look into these properties," Stuart Frazier from CollegeRealEstate said. Frazier also suggested that students co-sign with their parents and get reduced interest rates.
Kiddie Condo Loans
The Federal Housing Administration, FHA, endorses the "Kiddie Condo" loan program as an economical approach. According to its Web site, "this type of mortgage allows a person to co-borrow with a blood relative (e. g. parent, grandparent, sibling, etc.) who helps qualify for the loan using their income or assets."
This loan offers three main benefits: a low down payment, a lower, owner-occupied interest rate on the mortgage, as opposed to the higher investment property interest rate and last, and it helps a student to establish credit.
According to the FAA Web site, one stipulation for this type of loan is that at least one borrower must occupy the property as a primary residence, but the extra bedrooms can be rented out to reduce the cost of the mortgage. Furthermore, the tax benefits can be divided among the owners.
It seems that home ownership is a win-win situation for both real estate agents and their student customers.
"For one thing, there is constant demand. Regardless of the economy, kids go to college every year, and they will always need places to live. Considering that room and board at a four-year private college can run up to $10,000 per year now, private housing is an attractive option for some students," Betsy Shiffman reported in a Forbes.com magazine article entitled "A+ College Real Estate."
Richard Levy, a senior research analyst at the National Multi Housing Council in Washington, D.C., understands the mutual appeal of student homeownership. In a Sept. 26 article on the real estate Web site GlobeSt.com, Levy suggested there are several reasons why real estate professionals are drawn to student housing investments, mostly due to generational, demographic and economic trends.
Levy notes the predicted 11 percent increase in enrollment between 2003 and 2013 as a factor. Moreover, the growing segment of the nontraditional college student is significant. Levy argues that almost 40 percent of today’s undergraduates are over age 24.
Levy concludes that the economy can affect people’s education patterns. When the economy is good, people want to seek a higher degree to become more marketable; when the economy is bad they simply want a degree to get a job. Last, Levy suggests that the median rent increase among student apartments is a possible reason.
© 2008, Young Money Media, LLC. All rights reserved.
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