As high housing costs nationwide continue to reshape buyer decisions, many house hunters, including first-time buyers, are turning to relatively affordable inland college towns, pushing home prices in some of those markets up at double-digit rates, according to a July 15 Redfin report.
The national real estate brokerage defines a “college town” as one in which at least 10 percent of the population is made up of students at a four-year accredited college and is located at least 30 miles from a metro area that has a population of more than a million people.
Ranking the most and least expensive college towns, Redfin noted that many of the most affordable markets were in the Midwest and South, attributing their lower median home prices to more abundant land and lower homebuilding costs.
The report analyzed Multiple Listing Service data from March to May.
Dayton, Ohio, home to the University of Dayton, for example, had a median home price of $139,000—the lowest among the college towns featured in the report. By comparison, the national median price reached an all-time high of $440,600 in June, according to the National Association of Realtors.
Syracuse, New York, and Mount Pleasant, Michigan, also had median prices below $200,000.
The report said lower home prices could make these college towns attractive to first-time buyers, university employees, and investors seeking lower-cost rental markets.
However, home prices have been rising by double digits in some cities. Morgantown, West Virginia, and Tuscaloosa, Alabama, for example, had median listing prices of $275,000 and $301,450, respectively.
“Many of the college towns with home prices rising the fastest are also among the most affordable places to buy a home right now,” Redfin senior economist Yingqi Xu said in the report.
“That combination is attracting buyers who have been priced out of larger metros, while universities continue to provide a reliable foundation of demand.”
Redfin named State College, Pennsylvania, home to Pennsylvania State University, as one of the hottest college towns in the nation where both sales and prices are escalating.
A typical home in the city could go under contract in five days, compared with 49 days nationwide for homes that sold in May. Median home prices have also jumped by 10.6 percent year over year, to $459,050—slightly above the national median.
According to a June Bank of America report, affordability remains the “top barrier” to homeownership, with 58 percent of home prices too expensive for the average first-time buyer and higher mortgage interest rates that keep prospective buyers at bay.
Still, it noted that Gen Z (ages 18 to 29) are taking steps to make homeownership more attainable. Over 28 percent are taking on extra jobs, while 32 percent are considering co-buying with family or friends. Another 31 percent are planning to leverage down payment assistance programs.
“We are seeing meaningful changes in attitudes toward homeownership,” Bank of America’s head of consumer lending Matt Vernon said in the report. “Despite real and persistent challenges in the market, buyers and owners are increasingly optimistic, and many are starting to move forward rather than waiting on the sidelines.”
A March report from Research.com, a national academic platform, found that in addition to educational opportunities, college towns offer residents a wealth of recreational and cultural opportunities including annual festivals, live music, theater performances, art exhibitions, and more.
“College towns often have unique local dining experiences and lively entertainment venues,” the report noted.
On the opposite end, Santa Barbara, California—ranked the most expensive college town—had a year-over-year decline of 9.4 percent to a median home sales price of $1.9 million.
Following the trend, Boca Raton, Florida—ranked second most expensive—dropped 4.7 percent year over year to a median of $820,000, while Flagstaff, Arizona, fell by 3 percent year over year to $710,000.
