College is paying off for housing markets. Colleges and universities are having a strong effect on housing across the country, with metros that have heavy university influence outperforming national rates in home price trends, according to Clear Capital’s latest Home Data Index Market Report.
Clear Capital found in a sample of 10 metros that each have a university presence, average price growth has been 32 percent since 2004.
In some places, price growth has been even more. In Ithaca, N.Y., home to Cornell University and Ithaca College, home prices have surged 51 percent since 2004. In Boulder, Colo., home of the University of Colorado, home prices have jumped 26 percent in that time. The same is true even in larger metros like Boston, where Cambridge housing demand from students attending Harvard University have fueled a 39 percent price growth over the last decade. Indeed, the university’s ZIP code has outperformed other Boston metro areas by 36 percent since 2004.
“College towns are just another example of how real estate trends are impacted by local market conditions,” says Alex Villacorta, vice president of research and analytics at Clear Capital. “It’s clear a significant portion of loan dollars are going toward student housing costs, thereby creating a critical demand surge. Healthy student populations activate a positive feedback loop where housing fuels local economies and jobs, which increase the overall confidence and demand in these towns.”
That said, concerns over rising student debt and recent college graduates’ ability to qualify for a home loan “could certainly create a drag on the recovery overall, as the next phase depends on re-engagement by traditional home buyers,” Villacorta notes.
“Generally, investment opportunity in college markets yield benefits that ripple beyond localized home price strength, since higher education typically begets higher income, which has allowed more folks to invest in the American Dream,” Villacorta says. “While this is still true today, the struggle between rising student debt and a first-time homebuyer’s desire and ability to qualify for a mortgage will pose an interesting challenge for the future of the recovery.”