Rent prices in college towns have fallen this summer as colleges and universities across the country have opted for remote learning during the coronavirus pandemic, according to a Zillow analysis.
“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,” Zillow says in a release.
Data from The Chronicle of Higher Education and Davidson College show 44 percent of U.S. colleges and universities are operating fully or primarily online for the fall semester, while only 27 percent are offering classes fully or primarily in person.
A new Zillow analysis shows that reduced demand in this largely remote environment is having a noticeable impact on rents in ZIP codes in which at least 20 percent of the population is college students, who make up about eight percent of the U.S. rental market in a typical year.
Softening college towns rental market
“The softening rental market across the country is starker 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 in the release.
“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,” she said.
Rent prices in college towns had been growing but now are dropping
In neighborhoods with a high share of college students, average rent prices were growing by 4.7 percent year-over-year in February.
By August, when many students would typically move back near campus, rents were down 0.5 percent 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 percent annually.
In May, the average rent was only 1 percent lower in college areas than non-college areas. By August, that gap had widened to 3.4 percent 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 seven percent year-over-year in Boston’s 02115 ZIP code, which includes Northeastern University – made up of about 60 percent college students – and down five percent in the 94704 ZIP code in Berkeley, Calif., with about 70 percent of the population being college students.