Nov 04, 2020 11:11 AM EST
Can University Cities Recover Once the Pandemic Is Over?
Many schools and universities have had to delay in-person instruction because of the pandemic. People have had to adapt and figure out how to make the best out of a terrible situation. But, it isn't just the students and their families who are faced with the struggles of home learning.
The impact of COVID-19 on college towns is more serious than we could have imagined. HomeLight's Q3 survey pulls back the curtain and reveals that the virus has turned once bustling college towns into a shell of what they once were.
The question is, will these cities be able to bounce back once the pandemic has subsided and universities reopen?
All across the country, colleges and universities had to pivot away from the typical in-person learning and an online curriculum due to the pandemic. Students who may have stayed in dorms during the school year are now staying home because they have nowhere else to go.
According to the top agents that have taken part in the survey reported that the number of vacant dorms have increased from 5.2% during 2019's fall semester to 7.4% this year. Vacancies per unit have gone up by 1%, and in order for landlords to get anyone willing to rent their properties will have to lower the monthly rent!
Little to no demand for rental properties
Investing in rental properties is a fantastic way to make passive income, but it all hinges on whether or not there's a demand for rentals in a specific area. College towns are a great place to invest because at most schools, the cost to live on campus can be astronomical! To avoid the cost of on campus living, students can find roommates, rent a house, and save some money as a result.
However, since many students are staying home because the schools are closed, there isn't a demand for rental properties. As we mentioned, landlords have to make the tough decision to lower the rent, thus decreasing their passive income, or selling the property outright.
Housing inventory is hit or miss
Roughly 30% of participating real estate agents said the number of rental vacancies in their area are declining or showing signs of declining. The market is so bleak in many cities, 81% of agents said the inventory is extremely low - even with landlords selling the rental properties.
Some cities fare better than others
While many universities have postponed reopening for the time being, there are still some schools that have reopened and are holding in-person learning. Towns surrounding these universities are faring much better and the rental market could see a surge in rental applications if the university ultimately closes if there's a surge of infection.
Right now, there is a lot of concern for university towns because many local businesses and restaurants rely on students, as both consumer and employee. These establishments are putting "Closed" signs on their doors, hopefully temporarily.
Yet, because we don't have a clear plan to get the pandemic under control and it's uncertain when universities will reopen for the remainder of the school year... We can't say for sure if the local economy and housing market will spring back to life.
With all of that said, investors who do buy rental properties now while interest rates are so low could make out like a bandit when things return to normal because there'll be a surge of students seeking off-campus rentals.
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