A college education has become more and more unaffordable over the years, with tuition increasing 9 percent between 2011 and 2016. But it’s not just skyrocketing tuition that’s hitting students hard; there are the additional expenses of books, meal plans and the big one—housing. Dorm rooms in the U.S. range in cost from $232 to $1,817 per month, with a median monthly price of $705. It’s a hefty price tag for a college student and it led us to wonder, are there cities where students (or their parents) are better off buying real estate?
It may not make sense in cities like San Francisco where the price for a dorm ($926 per month) is minuscule compared to the high cost of rentals and real estate; the average mortgage on a SF condo is $5,279 per month. But can relief from soaring college costs can be found in more affordable cities?
To find out, we compared the monthly dorm rate at 195 U.S. public colleges with the median monthly mortgage on a condo in each of those cities. We found that at 47 colleges it’s actually more cost effective for students or their parents to buy a condo instead of rent a room on campus.
We ranked the colleges by enrollment to narrow down the list to the 15 most popular colleges. Because these schools have more students and thus a larger pool of new students looking for housing each year, we determined they would be the best places for investment opportunities.
|Rank||College||City||Monthly Mortgage Cost||Monthly Dorm Cost||Cost Difference|
|1||University of Arizona||Tucson, AZ||$545||$811||$266|
|2||Georgia State University||Atlanta, GA||$1,116||$1,139||$23|
|3||University of South Carolina-Columbia||Columbia, SC||$511||$671||$160|
|4||Kent State University at Kent||Kent, OH||$664||$751||$87|
|5||Louisiana State University and Agricultural & Mechanical College||Baton Rouge, LA||$731||$837||$105|
|6||University at Buffalo||Buffalo, NY||$650||$866||$217|
|7||University of Kentucky||Lexington, KY||$730||$876||$146|
|8||University of Oklahoma-Norman Campus||Norman, OK||$470||$752||$282|
|9||The University of Texas at El Paso||El Paso, TX||$441||$546||$105|
|10||The University of Texas at Dallas||Richardson, TX||$693||$769||$76|
|11||University of Akron||Akron, OH||$733||$780||$47|
|12||University of Delaware||Newark, DE||$605||$813||$208|
|13||University of North Carolina at Greensboro||Greensboro, NC||$487||$715||$228|
|14||Sam Houston State University||Huntsville, TX||$427||$570||$143|
|15||Miami University-Oxford||Oxford, OH||$489||$831||$342|
Misty Hurley, a Redfin real estate agent in Tucson, wasn’t surprised to see The University of Arizona at the top of the list.
“I’ve had lots of parents contact me after comparing the cost of renting versus buying a home for their college student,” she said. “They’re often coming from places like Washington D.C., Los Angeles or Seattle, where home prices are much higher. The median sale price in Tucson is $195,000, so well below the national median sale price of $293,000 that Redfin reported in August.”
The downside, she says, is inventory is getting tighter in the city and college students (and their parents) are likely to face multiple offer situations, especially for homes under $200,000.
Rounding out the top five list were Georgia State University, the University of South Carolina, Kent State University and Louisiana State University, all of which are in cities with median home prices below the national average.
In addition to saving on monthly housing costs in these cities, there are other perks to purchasing real estate.
“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.”
Owning a property can also be a great way for college students to get involved with the community and feel like they’re really a part of the city, she says.
There are certain considerations students and their families should keep in mind when deciding to purchase real estate–such as the initial down payment, which was not accounted for in this analysis, the maintenance required to keep up a home and other costs like HOA fees. To find out what a mortgage payment will be on a particular home, scroll down to Redfin’s payment calculator on any home listing.
On-campus housing cost data was pulled from the National Center for Education Statistics. We looked only at U.S. public institutions that grant Bachelor’s degrees and that have full-time, first-time undergraduates. We then compared that list to cities where we have condo price data, which left us with 196 public institutions. To calculate the average monthly mortgage, we assumed 20% down, a four percent interest rate on a 30 year fixed mortgage, 1.125 percent annual property taxes plus $70 for homeowner’s insurance. The full data set showing all colleges can be downloaded here.