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Commentary: Students in the Neighborhood, Good or Bad for Property Values?
Posted By beth On June 25, 2007 @ 2:21 PM In Business Development,Business Development & Best Practices | Comments Disabled
By June Fletcher
RISMEDIA, June 26, 2007?(RealEstateJournal.com)?Question: I own a home right up the street from Central Connecticut State University and am concerned about the future of the community and real-estate values surrounding the university.?My main concern is that people are buying single-family homes and not fixing them up, then renting them out to college students. In the long run, will my nice street turn into a slum? It scares me enough to think about moving to a new town or community. Should I stay or should I go?
-? Krista Tulisano, New Britain, Connecticut.
Krista: Those of us who’ve accumulated a bit of dust on our diplomas tend to idealize college towns. We remember the cozy brick faculty houses, the wrought-iron fences and the clambering ivy; we forget the unpainted shutters, the broken beer bottles and the weeds.
But as 80 million echo boomers make their way through the educational system, their impact is becoming harder to ignore. Total enrollment in degree-granting institutions is projected to grow between 13% and 18% between the years 2004 and 2015, according to the National Center for Education Statistics, and there simply isn’t enough on-campus housing to accommodate them all.?
As students spill over into surrounding neighborhoods, the inevitable keg parties and dandelion-choked yards become harder to ignore.
So does that mean it’s time to sell? Not necessarily. Checking your ZIP code, 06053 at City-data.com, I see that about half of the residents rent, compared to a third statewide. But the median age of the ZIP is 33.5 years and 61% live in family units, indicating a good proportion of the neighborhood is probably made up of graduate students or young faculty members, who aren’t as likely as undergrads to tear the place up.
Purely from an investment standpoint, selling right now may not be the wisest course. Scarcity means opportunity, and prices in your neighborhood are on the rise, even though the overall housing market is slowing. A check on your home’s value on Zillow (we’re not mentioning the street address to protect your privacy), shows the Web site’s “Zestimate” of the property’s worth — based on comparable sales and other factors — was $9,695 higher on June 6 than it was a month earlier. Zillow’s total-value estimate for your home, $199,152, is similar to estimates of value by other appraisal Web sites, like eppraisal.com ($196,518) and reply.com ($199,448).
If you decide to move out and rent your house, either to students or the retirees who increasingly want to live close to their alma maters, you also could do very well.
According to the National Multi Housing Council, median rent growth in 64 college towns across the country was 7% from 2004 to 2006, exceeding the Consumer Price Index of 6.5%.
If you decide to stay, however, it may make sense to enlist your neighborhood homeowners association — or start one, if you don’t already have one — to talk with the university. According to Central Connecticut State University’s Web site, the university wants to maintain good relations with the surrounding community.
Among its recent initiatives: A town-gown committee to address unruly behavior and loud parties, and adding more on-campus activities.? The university says it wants to expand volunteer programs in the community as well, including one where students rake neighbors’ leaves in a gesture of good will.?Bring out a tray of hot chocolate and an extra-welcoming attitude when that happens, and you may find that your young neighbors, for all their boisterousness and occasional carelessness, don’t really want to live in a slum, either.
June Fletcher is a staff reporter at The Wall Street Journal and the author of “House Poor” (Harper Collins, 2005). Her “House Talk” column appears most Mondays on RealEstateJournal.com.
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