In average years, owning a rental in a college town has some significant advantages. Students and faculty at colleges and universities create ready-made rental markets that are relatively impervious to local economic trends. Student populations are increasing as scholarship and loan programs help more young people get a four-year or graduate degree.
School opening and commencement dates are set years in advance. Landlords know precisely when demand for rental space will peak and ebb. Nine-month leases are the norm so that college rentals may have slightly higher monthly rentals than standard 12-month leases. The summer is an excellent time to repair and renovate rental properties in college towns. With a shorter rental period, college town landlords charge slightly more per month than they would for a 12-month lease.
Seemingly like everything else, the coronavirus pandemic is changing college life. Last spring, the virus forced many schools to close early. Many colleges and universities did not announce opening times until early August, giving students and faculty just a few weeks’ notice.
With the virus still out of control in many areas, most colleges are setting their schedules one semester at a time. With as little as two weeks’ notice, students and parents are rearranging their plans to comply with changing move-in dates.
Students are a Quarter of the Local Rental Market
At the University of Virginia in Charlottesville, VA, first-year undergraduate students must live in University housing. Upper classes and graduate students prefer the freedom of living off “the Grounds,” as the historic campus is known. More are moving off-campus for financial reasons. UVA raised housing costs in university housing by 3.5% in 2019 and by the same amount again in 2020, bringing the price to $6,680 per year for first-year students. For upperclassmen housing, several dorms cost as much as $8,120 per academic year.
Students account for nearly one-fourth of all rental households in the Charlottesville housing market. Some 15,200 of the school’s 24,600 students live in apartments or single-family rental housing units, mostly in the city of Charlottesville or in portions of Albemarle County located near the University. Since 2010, approximately one-third of the newly constructed apartment units have been built for and marketed to students. The bedroom, not the entire unit, is typically rented to students. Rents for entire units are typically 10% to 70% higher than comparable newly constructed properties in the housing market.
UVA students commonly make arrangements for off-campus housing a year in advance. The marketing of leases for the fall of 2020 started in October 2019. Initially, demand was strong. “Before March, we were fortunate to be ahead of our lease-up goals for the 2020-2021 academic year,” said digital marketing manager Stephen Colvin of Management Services Corporation, a locally owned property management company. “Since March, we have seen a decrease in leasing activity. Students continue to sign leases for the fall, but velocity has declined precipitously since March 16,”
University of Virginia Asks Students to Arrive Two Weeks Later Than Planned
In March, UVA closed down all in-person classes and, for the remainder of the semester, moved all classes online. The University did not announce the schedule for opening in the fall until August 4, leaving thousands of parents and students wondering when they should arrive on “the Grounds,” as the campus is known. All undergraduate courses for the fall semester opened as initially scheduled on August 25 but operated online September 8, when in-person instruction began. The University urged students who plan to live off-campus to delay their return until then.
On August 17, The University of North Carolina at Chapel Hill announced 177 students had tested positive for COVID-19 after one week of in-person classes, and the school will shift to remote learning. “Under current conditions, it is not safe for you to come to campus,” the UNC faculty members wrote in The Charlotte Observer. Students were told that they can cancel contracts with Carolina Housing with no penalty and that residents with “hardships,” like those without reliable internet access, international students, or student athletes, can stay if they choose.
Approximately the same size as UVA and 190 miles away, the two schools are considered to be peer institutions. A University of Virginia spokesperson said that administrators are “monitoring” the situation in Chapel Hill.
Charlottesville’s Rents Defy National Trends
From June to July, rents on a national basis experienced a cumulative decline of 0.3% since the pandemic began. While this dip may seem modest, it is occurring at a time of year when rent growth usually is at its fastest due to seasonality in the market. Over the entirety of the past year, the Rentonomics national index increased by just 0.2%, by far the lowest year-over-year growth rate over any of the past five years. Rents are decreasing when rental activity is typically at its peak. The fall-off reflects the financial hardship and shifting preferences imposed by the pandemic.
However, the pandemic did not slow down healthy appreciation in Charlottesville’s rents. As of July 2020, the average rent for an apartment in Charlottesville was $1715, a 7.99% increase from a year ago when the average rent was $1578, and a 1.87% increase from June when the average rent was $1683. One-bedroom units have increased by $170 (18.6%), and two-bedroom apartments are up by $117 (7.8%), according to RentJungle.
Homes.com’s How To Section
If you’re looking to buy, whether for an investment property or family home, then visit Homes.com’s How To section where you can find free, step-by-step guides on the entire buying, selling, or renting process. You can also visit our blog for all of the resources you might need when buying a home.