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Get smart before buying in college town

Dear Steve,
My family has outgrown our current house and we have found a larger house that would be perfect for us. However, it is located in a college town next to rental properties, mainly duplexes to four-unit buildings. How will property value be affected by the close proximity of rental units? What other issues should I consider?
-- Mike

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Dear Mike,
Proximity to rental properties can be an iffy proposition anywhere. Tenants are transitory, and thus unpredictable, and can keep a neighborhood in cultural flux. Of course, some college towns are far better policed than others, and some have better neighborhood associations, code-enforcement departments and stricter housing regulations than others. You'll have to become a college-town "student" yourself and do your homework on the neighborhood.

As for appreciation, data from the Office of Federal Housing Enterprise Oversight indicates that in cities where student enrollment is equal to at least a fourth of its population, housing appreciation has trailed nationwide averages by a couple of percentage points in recent years -- it rose roughly 3 percent annually in college towns compared to 5 percent in noncollege towns. That will vary from city to city, of course.

It seems that there's a Web site for everything, and there's one called College Town Issues that touches on the various cultural aspects of college neighborhoods across the country. Using a bank of newspaper and internally generated articles and reports, the site focuses on the best college towns, the most "walkable" communities, active neighborhood groups and such issues as conflicts between neighbors and college students.

Assuming that the campus is reasonably close to where you're moving, and that students will occupy a sizable portion of the neighborhood about nine months a year, your primary concern will probably be noise, and the possibility that students may be pouring out into yards and streets for regular late-night soirees. Sometimes, drunken students mean vandalism, yard urination, etc., though hopefully not in your case. I would definitely call on a few long-time residents in the neighborhood for their input before you buy.

Any way you look at it, there'll probably be a few quality-of-life trade-offs. But if college enrollment is high, the university is well established and campus-area homes are stately and for the most part well-maintained, you'll probably fare better on the real-estate side of the equation. And, you might really enjoy the intellectual buzz of living in an academic community.

Here's another aspect to consider. You mention that your family has outgrown your current place, so I'm assuming you've got at least a couple kids. If they plan to attend college in the town you're moving to, consider the dorm/housing savings you'll enjoy if you decide to remain in your neighborhood until they attend the university. Even if you and your spouse want to move, your kid or kids could remain there, depending on their ages, and you could rent out the other rooms in the place to reliable students. (Screen them carefully, needless to say!) Having someone you trust on the premises to keep an eye on things is not a bad idea. And when your kids graduate, you could keep the place as a rental home, or just sell it outright.

Good luck with your move.

 
-- Posted: Oct. 9, 2004
     

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