Aerial view of downtown Boston and the harbor, photo by Kevin Tostado.
Investing across America
Recently, AGBeat columnist Jeff Brown extolled the virtues of investing in Texas and CondoDomain.com President Hoyt Morgan named Washington D.C. as the top city for investing.
There are many reasons a city can be seen as a quality location for investment, and today in the spirit of school starting, we look to Move.com‘s list of Top 10 Best Back to School Real Estate Investment Cities, giving Boston the top spot.
“Pahk the cah in Hahvad Yahd”
So why did Boston take the cake? According to Move:
With a median list price of $335,000 in June 2011, the Boston/Cambridge market has one of the higher median list prices of the bunch, but also has high renter demand from students at over 50 colleges including Harvard and MIT, ranked two and four. The median list price in Boston has dropped by 2.62% since last June. Average rental rates in Boston in June 2011 ranged from $3,122 for a two bedroom to $3,913 for a three or more bedroom unit, both higher than a mortgage payment of around $1,370 for a median-priced home with a 20% down payment and current mortgage rates for a 30-year fixed loan. Boston was also named one of the top 10 turnaround towns by CNN Money in May 2011.
“In Cambridge and some of the Boston Proper neighborhoods we have been seeing rents rising with demand and projections of further increases of up to 25%,” said Boston-area broker owner Paul Turcotte.
Investors will soon outnumber traditional buyers
According to the recent Move, Inc. investor survey, “In the next two years, real estate investors are expected to outnumber traditional homebuyers in their local markets by three to one, and 56.5 percent plan to put their investments to work as rental properties.”
“Local markets with universities or colleges can be an attractive option for many local real estate investors,” said Move, Inc., Chief Executive Officer, Steve Berkowitz. “Housing demand in college towns is generally high and vacancy rates are usually low. Combine the supply and demand ratio with rising admissions and the five percent rise in rental rates expected by the end of the year, and rental property in college towns can be a smart option for the right investor.”
Stephanie Crawford, @AgentStep
August 11, 2011 at 1:38 am
Yay Nashville! Each year I normally get a handful of Vanderbilt parents who are interested in condos for their kids.
Manhattan Beach Agent
August 11, 2011 at 9:13 am
Investors have the ability to carry capital and risks to bridge demand gaps for markets. If investors outnumber investors now that means that prices are probably starting to make sense for buyers; non-investors will enter markets as consumer balance sheets improve, and IF labor markets pick up. Right now it's investors who are putting a floor to this market, but there's much more work that needs to be done in absorbing REO inventory.
Michael
August 11, 2011 at 9:53 am
I would hardly call 3/4 of this list college towns. When I think college town, I think of places like Athens, Tallahassee, Ann Arbor, Berkeley, and Boulder… places where the university props up the local economy.
I would hardly define places like Atlanta, Chicago, Baltimore, Nashville, and St. Louis college towns. Yes there happens to be colleges there, but the cities run 110% independent of the schools.
The list up here could just as easily read, "Big Cities that happen to have colleges in them."
Jill Kipnis
August 11, 2011 at 6:34 pm
Thanks for the post. Our list mentions the top ten college towns based on the leading universities featured in the US News Rankings and Reviews list of best colleges in 2011, however there are certainly opportunities nationwide. If there's a college nearby, there's also a steady stream of potential renters each academic year.