Residential property investors know there are certain kinds of markets more favorable to their business models than others. For example, rental property in college towns is huge. Buying the right properties in the right locations means a steady stream of university students more than willing to pay the rent. According to recent data from HomeUnion, those rents are going up.
The HomeUnion data shows that today’s university students are more apt to prefer luxury housing over standard college dorms. They want to be able to live in an environment that is reminiscent of what they had at home, so the most prestigious schools are in areas with the most expensive, luxury student housing.
The top 10 cities on the HomeUnion list for student rents are:
- Los Angeles, CA
- San Jose, CA
- Miami, FL
- Boston, MA
- Oakland, CA
- Salt Lake City, UT
- Dallas, TX
- Seattle, WA
- Lansing, MI
- Portland, OR
Cities like Los Angeles and San Jose may not be surprising, but what about Salt Lake City? The home of the University of Utah does not typically come to mind when Americans talk about luxury housing. Yet most of the luxury homes in Utah are concentrated in the greater SLC Metro.
It turns out that the University of Utah offers more than 100 undergraduate programs and 92 graduate degrees. The school has produced Rhodes scholars and Nobel Prize winners alike, offering excellent programs in law, medicine, architecture and political science.
Prestige Is Attractive
So what does all of this have to do with luxury housing and rental prices? It boils down to one simple fact: prestige is attractive. Whether you are talking about Los Angeles or SLC, prestigious universities have a much easier time recruiting the best students along with the faculty members needed to educate them.
The rise of luxury homes in Utah are not exclusively the result of the prestige of the University of Utah, but the university certainly helps. Off-campus housing is being created to accommodate students looking for high-end digs HomeUnion says they are willing to pay more than $2,000 per month for.
In terms of home purchases, well-paid faculty members coming to SLC to work at the university are not shy about spending on luxury homes either. They will pay whatever the market will bear.
The Building Block Effect
Data showing the relationship between housing prices and higher education also reveals something else that should be no surprise: a place like Salt Lake City will benefit from a building block effect rooted in a strong housing market and a prestigious university.
The building block effect is one of creating a town that is also attractive to business. Businesses want to locate in the SLC area because they know the university will produce a steady stream of competent graduates. Real estate developers want to work in the region because they can sell properties. From light industrial companies to retailers to service oriented businesses, everyone wants a piece of the SLC economy. The result is a strong housing market that ultimately leads to a rise in luxury homes for sale.
The data shows that America’s college towns are doing very well. Those doing the best are easily topping national averages for both rental and purchase prices. Those at the bottom of the list still tend to be doing at least slightly better than average. The fact is that university towns are attractive for a number of different economic reasons. One only need look at the supply of luxury homes in Utah to see it.