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Market Watch - Baton Rouge, LA: Parent Investors Driving Force in College Markets

Crawfish, jazz, LSU Fighting Tigers, Cajun cuisine, and yes, even voodoo may come to mind when someone mentions the city of Baton Rouge, Louisiana, but perhaps the term “parent investor” doesn’t. Maybe it should.

Rising college housing costs making more parent investors © olly - Fotolia.com

College housing costs are high and getting even higher. According to the College Board, fees for room and board during the 2010-2011 school year saw an increase of 4.6% at public universities and a rise in nearly 4% for private nonprofit schools. These costs, when combined with tuition and other fees, make it very difficult if not downright impossible for students to find affordable housing.

Parents of kids attending Louisiana State University and other schools are finding creative ways to combat the student housing problem. According to a survey by Coldwell Banker, 64% of their realtors who live in college towns are reporting an interesting trend. They are noting that a significant number of “parent investors”, disappointed with the choice of what they believe to be safe, quality housing for their kids, are opting to invest in homes for their kids to live in while attending university.

Jim Gillespie, CEO of Coldwell Banker said, “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 recent decline in the economy, 73% of the realtors surveyed reported that a large number of investors are buying homes near campus as rental property, whereas only 21% say they’ve experienced a decrease in this trend over the previous five year period.

According to RealtyTrac, foreclosed homes in Louisiana which were sold during the second quarter of 2011 were sold at about a third of what trouble free homes were sold for. Lower prices, combined with historically low interest rates offers both traditional investors and “parent investors” a unique opportunity to buy property at deeply discounted prices.

The Coldwell Banker survey also discovered that 51% of the realtors surveyed say that alumni are buying property in their old college “stomping grounds” and 49% say that a large number of retirees are moving to the home of their Alma Mater.

Gillespie notes that college towns have more to offer than just sporting events; entertainment, medical facilities, restaurants and a vibrant economy all contribute to the value of buying in a college town. “This is quintessential America. People have a special spot in their hearts for these places,” he said.  “Some of the best times of their lives were spent in college.”

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

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