College Cities Are Hurting Due to the Coronavirus Pandemic, Too
Home schooling has become a necessity for pre-k to high school students. Although there hasn’t been a national mandate requiring schools to remain closed, many states have instituted their own plans for reopening – if at all.
It isn’t just school age children who are suffering the effects of school closures due to the pandemic. Universities and colleges are also keeping their doors closed and millions of university students are staying home or looking for lodging elsewhere because the dorms are closed.
But, the real question is, how does this affect the housing market and the economy in university cities? Homelight recently surveyed 1,000 top real estate agents around the nation and released their Q3 2020 survey. In the survey, agents say these cities aren’t doing so well.
Let’s take a look at some of the reasons why.
No students equals smaller population
There’s no end in sight when we’re talking about school of all kinds reopening full time. Sure, there are some with staggered or modified schedules, but in many cases… We just don’t know. University cities in particular are suffering, according to 38% of agents who participated in the survey. They report that the housing market and the local economy is on shaky ground.
This is evident by the increase in open rental vacancies during the 2020 fall semester. In 2019, the vacancies were about 5.2%, but this year it has risen to 7.4%.
Some cities are the exception
Though many college cities are trying their best to stay afloat during the pandemic, there are a few cities that are doing alright. Why, you ask? There are a few universities that have reopened with proper safety protections in place.
Do keep in mind that the schools have stated they’ll remain open as long as there isn’t an increase of COVID cases. For example, State University of New York requires students to test negative for the virus before leaving for Thanksgiving break – after which the university will go to remote learning.
Investors are hesitant about buying property
Although many agents around the nation are experiencing a strong seller’s market, 30% of agents are seeing a decline in folks eager to invest in rental properties. If you think about it, it makes sense. Why would you want to invest in a rental property in a college town if there aren’t students looking to rent?
Of course, this may change once the universities reopen and students come back and are eager to find a rental so they can live off campus. So maybe now would be a decent time to invest while interest rates are low. It really depends on the investor and what they are willing to and are capable of handling.
Inventory fluctuation causes concern
You know how we said investors are hesitant about buying rental properties? Well, the number of people looking to buy a house are holding steady. The survey revealed that 45% of agents said their markets are seeing increasing home prices and more buyer activity.
With 19% of landlords putting their rentals on the market, you’d think that this would appease the demand for housing. However, that isn’t necessarily the case. Although there’s an increase in buyer activity, that doesn’t mean there’s enough of a demand. Or, in some instances, the former rental properties are in disrepair and need work.
Times are tough right now, and those hoping to buy a house aren’t necessarily looking for a fixer-upper. If you’re shelling out hundreds of thousands of dollars just to buy a house, folks aren’t going to be eager to pour more money into it to make the home livable.
So, the real question remains… How will the housing market fare in 2021? Will it improve if and when the schools reopen? It’s hard to say. With fingers crossed, let’s hope it picks up!