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Student housing and post-student living

Email|Link|Comments (2) Posted by Rona Fischman August 11, 2008 07:40 PM

Last week, my nephew Nate stayed with us. Nate is 21, a college graduate in mathematics, with a minor in political science from UConn. He’s moving to Boston. He began job hunting and the neighborhood research toward finding an apartment to share with other recent grads.

The Boston Globe just published two articles about young adult housing. One discussed how recent graduates should not jump into buying a condo or starter home.

The second Boston Globe article reports that higher number of juniors and seniors are choosing dormitory housing because of increased costs.

The first one makes points worth repeating:

*The cost of renting is lower than the cost of owning. (See this nifty chart mentioned by one of my readers.)

*If you are not sure you intend to stay here for more than five years, you may be happier in a flexible living situation.

Before these articles came out, I had already given the same housing advice to Nate. He is room-mate shopping on Craig’s list. I have already told him to forget about buying for another five or so years, even if he had the money.

I see the second article as a good thing for Nate. Maybe he’ll have better rental choices. I lived in a dorm all the way through college, but that is less the norm now. For the generation behind mine, it seems that no matter how nice the dorm may be, an apartment is a step up for junior and senior year. I am concerned that the return to the dorm is is a sign of tough economic times.

I gave my real estate advice to Nate, but I don’t know much about job hunting. He wants to do data analysis and was looking at temp jobs to get his feet wet. Is that a good idea? Do any of you want to hire a bright and friendly guy?

As we brace for the annual flood of UHauls, 18-21 year-olds and their parents, what advice do you have for college students and recent grads?

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2 comments so far...

My wife and I are recent college grads (she's 23 and I'm 26) and we decided to buy a starter ranch in Metrowest. I keep hearing how it's much cheaper to rent than to buy, but we're only paying $1750/mo for interest and escrow (the rest goes to principal), and all the single-family houses in the area rent for $1800-2100/mo. So for us, it seems to cost about the same after factoring in maintenance and the opportunity cost of our hefty down payment (i.e. lost interest). I would've been willing to pay a little extra for the sense of a security in a fixed affordable housing payment for the next 30 years anyway. But my point is, it's very possible to find deals where buying costs the same as renting -- you just have to know your market.

Posted by Mike August 11, 08 10:41 PM

You need to know the market, but you also need to be in a certain market. In most places in metro-Boston, the rental is much lower than the acquisition costs, especially when you add in the closing costs and resale expenses.

I will be posting on starter homes later today. In most cases, you need to stay put for at least five years -- maybe more in this market -- to have a chance of doing well financially on it. Many younger buyers get tempted to leave town too soon by the call to better jobs or graduate school.

I work with people who have a level head, like you seem to have. There is a benefit to owning that is intangible: when you own you will not be asked to move, you can remodel and decorate as you see fit, and it is yours.

I am not slamming those who buy. However, buying without doing the math is foolish. I commend the article for articulating the expenses in a way that many overlook.

Best of luck in your home. May you enjoy it in good health.

Posted by Rona August 12, 08 12:50 PM