One of the most vexing aspects of college is finding adequate housing. Universities in cities almost never have housing to handle their entire undergraduate study body, and if you’re a graduate student, housing services basically laughs at you and sends you on your way.
But it appears there is now a silver lining to the mortgage crisis sweeping America; Denver parents are taking advantage of bargain home prices to ensure their kids have college housing. Nationally, home prices have fallen 14.4% over the past year, with some cities seeing even steeper declines like a 21.7% dip in Los Angeles. Parents of some affluence have come to realize that paying a 2nd mortgage is a better deal than one mortgage and rent on their kid’s college dorm or off-campus apartment.
All Kevin Meador had to do was crunch the numbers to determine it made more sense for him to buy a house for his daughter Jeni, who just graduated from Colorado State University, and her two roommates than it did to rent.
“The last two years, she’s been living in the house with a couple of roommates paying rent,” Meador said. “I was able to have a break-even cash flow. She lived there for free.”
Even though Jeni has graduated, Meador is keeping the house, anticipating his son Michael will live there when he completes his freshman year. Meanwhile, he’s renting it to other CSU students
Not only is an investment in a market that will eventually rebound, but it serves as a tax write-off for parents and ensure they have a place to stay when they visit (I always discouraged home coming weekends).
Anastasia at Ypulse expressed concern over this housing trend further entangling the financial and emotional relationship Gen Y has with its parents.
Still, I wonder how much the increased emotional closeness this generation seems to have with their parents has enabled this type of arrangement as well. It certainly keeps the financial strings attached for much longer…
A significant portion of college students leave their college towns and states upon graduation, so I have my doubts that established housing would be incentive enough to stay, since location is one of the key factors in job choice for new graduates. But for those that do, maybe those entangling alliances are another shift in family culture.
In the 1950s, 80 percent of all Americans lived in a home where the head of household was married. Now, that number stands at 52 percent. The number of young people growing up in single-parent households has jumped from 10 percent in the boomer generation to the current figure of 26 percent.
Perhaps buying homes for their children could become a new standard in how Boomers will maintain relationships with their extended family beyond the first 18 years of life.
Additionally, the share of grads that do stay would likely bolster the spirits of government officials who have spent years trying to figure out how to slow the brain drain and $$$ drain to cities and states with better salaries, opportunities, and lifestyles.
Maine, for instance, has taken to paying graduates to stay via tax credits.
The tax credits would amount to a maximum of $2,100 per year, or $8,400 total, for a graduate who spent four years at a Maine college. . .
Maine needs the program because more than 50 percent of the nearly 7,000 students who earn associate’s or bachelor’s degrees there every year leave the state for an extended period, according to Opportunity Maine , the group that launched the initiative.
Many students who earn bachelor’s degrees leave the state because they graduate with an average $22,301 in loans, said Andrew Bossie , president of Opportunity Maine.
only 29% of Philadelphia college graduates who aren’t originally from the area end up staying, compared with 86% of those who are.
It remains to be seen if this local Denver trend becomes more common place nationally. And it’s too soon to tell what the long term consequences of parents choosing to support their children in this way. But for the time being, at least some parents think the benefits outweigh the costs.
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