SEATTLE, Sept. 17, 2020 /PRNewswire/ -- Rent prices
in college neighborhoods have fallen this summer as colleges and
universities across the country have opted for remote learning
during the coronavirus pandemic. The drop throughout college areas
stands out even in a rental market that has softened across the
board since February with rent price growth slowing and
landlords offering more concessions.
Data from The Chronicle of Higher Education and Davidson College show 44% of U.S. colleges and
universities are operating fully or primarily online for the
Fall semester, while only 27% are offering classes fully or
primarily in person. A new Zillow® analysis shows reduced
demand in this largely remote environment is having a noticeable
impact on rents in ZIP codes in which at least 20% of the
population is college students, who make up about 8% of the U.S.
rental market in a typical yeari.
In these neighborhoods with a high share of college students,
average rent prices were growing 4.7% year over year in February.
By August, when many students would typically move back near
campus, rents were down 0.5% from the year before, marking the
first time since at least 2017 -- the earliest Zillow data is
available -- in which college-area rents were lower than the
previous year. Meanwhile, rents in ZIP codes with a lower share of
college students were up 2.6% annually.
In May, the average rent was only 1% lower in college areas than
non-college areas. By August, that gap had widened to 3.4% as rents
continued to fall in college areas but rose elsewhere. That's the
furthest college-area rents have fallen below rents elsewhere since
at least 2017.
Pricier areas with a high share of college students are often
seeing steeper rent declines. For example, the average rent is down
7% year over year in Boston's
02115 ZIP code that includes Northeastern
University, which is made up of about 60% college students,
and down 5% in the 94704 ZIP code in Berkeley, Calif., with about 70% of the
population being college students.
"The softening rental market across the country is more stark in
college neighborhoods as pandemic-mandated campus closures and
opportunities to complete courses online have provided motivation
for young people to move back home," said Zillow senior economist
Cheryl Young. "With many leases
ending at the end of the summer or the beginning of the fall, we
can expect even greater impacts in the months ahead. The good news
for rental owners is administrators seem to be itching to bring
students back to campus as soon as they can do so safely, so it's
possible this will be a relatively short-term shock to rent
prices."
Rising unemployment and campus closures, among other factors,
pushed about 2.7 million American adults to move back in with
parents or grandparents last spring. Those numbers dwindled during
the summer months, but there were still 2 million more 18- to
25-year-olds living at home in August than there were a year
earlier, an 11% increase. The jump in the share of these
college-age Americans living at home was sharpest among Black and
Asian and Pacific Islander young adults. Nearly two-thirds (65.7%)
of Black 18- to 25-year-olds were living at home in August, up from
56.5% last year.
With demand for rentals softening, landlords are offering
discounts or other incentives as they strive to attract new
tenants. Rent concessions on Zillow listings across the
country are nearly twice as common as they were in February. Even
small discounts or short-lived vacancies can have a big impact on
landlords -- previous Zillow research has shown rental owners
typically spend more than half of their rental income on fixed
costs of property ownership such as mortgage payments, property
taxes and insurance.
|
College
Areas
|
Non-College
Areas
|
Month
|
Average
Rent
|
Average Rent - YoY
Change
|
Average
Rent
|
Average Rent - YoY
Change
|
February
2020
|
$1,809
|
4.7%
|
$1,825
|
3.3%
|
May 2020
|
$1,800
|
1.5%
|
$1,819
|
1.2%
|
August
2020
|
$1,787
|
-0.5%
|
$1,851
|
2.6%
|
About Zillow
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ZG).
i Source: U.S. Census Bureau, 2018 American Community
Survey
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SOURCE Zillow