Students of all ages have had to adjust to distance learning thanks to COVID-19.
It was bad enough that many schools and universities had to shut down mid-year last year, but many schools remain closed this year, too!
The big question is, how’s the economy and housing market fairing in these university towns?
Homelight released their Q3 2020 survey and real estate agents aren’t very optimistic about the market. Here’s what has agents so concerned.
Quick Navigation
No students means no patrons, employees, or renters
It’s impossible to know when life will resume as normal because the coronavirus has yet to be contained.
As a result of this, businesses are closing their doors (sometimes for good). Of the agents who work in or around college towns, 38% have said their local economy has seen better days.
This is because these cities rely on students to be patrons, employees and renters.
Landlords are struggling to find tenants and this is evident by the number of vacancies, which has risen to 7.4% in the 2020 fall semester.
That’s a 2.2% increase from 5.2% vacancies for the 2019 fall semester.
Some cities are exceptions
Although a lot of university cities are struggling during the pandemic, it’s not necessarily the case for all college towns where universities opened like normal, providing they had safety precautions and guidelines in place.
With that said, these schools very well may close in the upcoming months if they experience a surge of confirmed cases of COVID.
If the schools have to close and send students home, the surrounding businesses and housing market very well could be in a shaky situation as well.
Reluctance to buy investment properties
Normally when the interest rates are this low, it’s more likely that investors will start buying investment properties and become landlords.
It’s a great way to make passive income and build your personal wealth after all!
Yet, 30% of real estate agents have reported there are fewer investors entering the local housing market because there’s no guarantee that they’ll be able to rent out the property.
In some markets, the house could sit vacant for months and the investor would either have to sell it or make payments out of their own pocket. As you can imagine, it’s not an ideal situation.
Inventory is not steady
At any point, the number of houses available on the market can fluctuate.
Since 45% of agents report the housing prices are increasing in their area and buyer activity has picked up, it’s understandable that there aren’t enough houses to meet demand.
Houses are being snatched up almost as soon as they’re listed!
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.
Heck, the market is so competitive that 87% of agents are seeing properties go into bidding wars because inventory is so low.
This is even with 19% of landlords putting their rentals on the market!
Let’s face it, the pandemic has thrown everything off kilter and there is no one who isn’t feeling the effects of it to some degree.
The housing market in university cities, for example, is holding on but who knows how much longer it will last. If schools don’t reopen and students come back to these cities…
What will that mean for the local economy and real estate?
One thing’s for sure, 2021 is definitely going to be an interesting year – hopefully for the best!