CSU Students Find Housing Scarce

This spring, students at Colorado State University are facing a drastically changed rental housing market from recent years. Most of the "Move in Specials" are gone. It's harder to find a landlord who will accept a pet. And the supply of available apartments, condos and rental houses isn't what it was just a year ago.


In fact, the Northern Colorado Business Journal recently reported that the Fort Collins apartment vacancy rate fell to 4.2% (5% is considered normal) and unlike most other areas of Colorado, the median monthly rent in Fort Collins rose from $821 a year ago to $872 currently.


Three major factors in the local market are driving this trend.


First, there has been a lack of new construction of apartments, condos and homes due to the unavailability of construction loans. New construction starts are off 70% from the peak building years in the mid-2000's and not are expected to begin a recovery until 2012. This leaves Fort Collins with a large deficit of new rentals.


Second, more families have had to turn to renting as they lost their homes to foreclosure or short sales. Unfortunately, a number of families facing the financial hardship of losing their home, also experience a family breakup which creates the need for two rental properties to replace the one home they had.


Third, the population of Fort Collins is continuing to grow from the outside. Colorado State University targeted 25,000 as the number of full time students it wanted to have on the Fort Collins campus. Now, with the recession causing people to go back to school in larger numbers and with record numbers of freshman applications, CSU is looking at nearly 27,000 students to serve and forecasting as many as 30,000 students in the next few years.


All those student need a place to live and neither Colorado State University nor the City of Fort Collins currently has a plan in place to house that many newcomers. As a result, rents for students this spring have jumped from the $300-$400 per bedroom range last year to $400-$500 per bedroom and rising.


At the new rent levels, the market for buying a house or condo for a CSU student to share and rent out bedrooms to friends is making sense again. Over the long term in Fort Collins, it has been one of the few ways to make the costs of college less painful.

To buy or not to buy, that is the question

I get a lot of questions from parents of CSU students about the wisdom and practicality of owning a condo or town home for their student during the college years. Usually, they want to know if owning is a better choice than renting, and my "it depends" answer is rarely what they expect. But lets take a moment to look at the pros and cons.

Renting is certainly easy in some respects. Houses and apartments are readily available in the current market, although that can change rather quickly. You can find some really cheap places to live, too, although they may be on the ugly side. And if you are not sure you will be in school or in Fort Collins for at least 2 more years, renting can make good sense.

However, renting also has it's drawbacks. Most of the apartments are more crowded than condos and town homes resulting in more noise, partying, neighbor nuisances and some forms of crime. Student renters also tend to move every year which is a sizable task and with each move come the risk of losing that damage deposit to the landlord who never thinks you left the place in as good a condition as when you moved in. Three deposits lost in three years adds up!

Now, owning a college condo or town home has a couple of drawbacks, as well. Your student can't just decide to move after a year if he or she decides the unit or location isn't a good fit so taking time to make a wise choice is highly recommended. And students who leave college early could force an early sale or rental of the unit.

Owning a condo or town home for a college student has the big advantage of making the housing part of the college expense tax deductible for most parents. It also provides more choices for the environment and location you would like your student to live in. Most often, condos and town homes are nicer & more secure places to live and may have more amenities than a typical rental. Your student can also begin to take some responsibility of ownership of the condo or town home and learn to manage both money and people by selecting the roommates and negotiating rents, which help make the mortgage payment. If a student owns the condo or town home with parents, he or she gains a more established credit rating, as well. Finally, owning a college condo or town home has historically been a very good investment in Fort Collins, with the price of residential property increasing at an average annual compound rate of 6.1% over the last 33 years. Many parents sell the unit for a profit after their student's graduation while others opt to keep it as a rental indefinitely or until another of their children come to CSU.

I'm always available to answer more questions on kiddie condos, as they are called, so if you have others that I haven't addressed, post a comment or shoot me an email. I'd love to hear from you.