A report released Thursday by real estate company Zillow found that as more college students stay home during the COVID-19 pandemic, the price of rents in neighborhoods surrounding the colleges has decreased.
According to Zillow, markets across the county are already relatively soft due to the pandemic, with just 2.6% increase in rents over a year ago, but ZIP codes typically home to many college students are actually showing a decrease in rents of .5%.
In the 92122 ZIP code, near UC San Diego — which has a 27.3% share of college students in normal years — rents were rising 4.8% year over year in February. Now, they're falling 5.1%. They've dropped $84 a month in that time.
Data from The Chronicle of Higher Education and Davidson College shows 44% of U.S. colleges and universities are mostly offering classes online this fall, a big hit to rental demand in college areas, with two million more college-age Americans living with their parents in August than a year earlier.
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According to Zillow's data, the reduced demand in this largely remote higher-education environment is having a noticeable impact on rents in ZIP codes in which at least 20% of the population is college students, who make up about 8% of the U.S. rental market in a typical year.
"The softening rental market across the country is more stark 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. "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."
In May, the average rent was only 1% lower in college areas than non- college areas. By August, that gap had widened to 3.4% 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.
Rising unemployment and campus closures, among other factors, pushed about 2.7 million American adults to move back in with parents or grandparents in spring, the Zillow report found. Those numbers dwindled during the summer months, but there were still 2 million more 18- to 25-year-olds living at home in August than there were a year earlier, an 11% increase. The jump in the share of these college-age Americans living at home was sharpest among Black, Asian and Pacific Islander young adults. Nearly two-thirds — 65.7% — of Black 18- to 25-year-olds were living at home in August, up from 56.5% last year.
