Most college students spend their first year living on campus, but the big question comes after: where should they live during the next three years? While renting an off-campus apartment is the traditional choice, in some college towns, buying a condo can actually be the more cost-effective option.
For parents with the means to help, buying a condo for your child may set them up for financial success early in life. But you’ll need to weigh the pros and cons of renting versus buying. Fortunately, Zoocasa has already crunched the numbers for you.
Zoocasa compared the cost of renting a one-bedroom apartment for three years with the cost of three years of mortgage payments on a median-priced condo across 50 college towns to learn whether it’s better for students to rent or buy.
If you’re curious about what’s currently available on the market, you can browse the newest U.S. listings here.
College Towns Where Buying a Condo Can Save You Money
In 14 college towns, three years of condo mortgage payments cost less than three years of rent. Since the majority of students use parent income and savings to pay for college, condo ownership can ease the financial strain on parents. This approach helps save money today and gives students a head start on financial stability after graduation.
College students living in Gainesville, Princeton, and Atlanta will save money by investing in a condo rather than renting a one-bedroom apartment. For example, students at the University of Gainesville may pay $40,644 over the course of three years in rent, while a condo buyer in Gainesville will pay $5,000 less in mortgage payments over the same period.
New Jersey college students may see the biggest benefit from buying a condo: three years of rent in Princeton totals more than $100,000, compared to just over $60,000 for mortgage payments. It’s a similar story for those living in New Brunswick, where the difference between three years of rent and three years of mortgage payments is huge at $25,000.
Even college students living in some of America’s largest cities can save money by investing in a condo. Those attending the University of Miami could save $30,000 over the course of three years by opting to buy instead of renting. Similarly, in Chicago and Washington, D.C., condo buyers can save over $10,000. In Houston and Tampa, the difference is over $4,000.
College Towns Where Renting and Owning Cost Almost the Same
The difference between the average mortgage payment and the average one-bedroom rent is small enough in some cities that it’s likely you could find an apartment below the average.
For instance, in Chapel Hill, the total cost of a condo mortgage over three years is only $242 more than renting, which works out to less than $10 per month. A savvy real estate agent could help you find a condo available within your budget, saving you hundreds of dollars over three years.
In Orlando, the difference between rent and a condo mortgage is similarly small, at just $292 over three years. For some University of Central Florida students, the chance to build equity could easily outweigh that added cost.
In Philadelphia and Nashville, the gap between rent and mortgage is wider but not prohibitive. In Philadelphia, three years of rent is $1,727 cheaper than three years of mortgage payments, while in Nashville, rent is $2,108 less.
Where Ownership Comes at a High Price
College students in California and Massachusetts face the greatest challenges in buying a condo. The cost of ownership is far higher than renting, and even students from higher-income families would need to put down a substantial amount of money. For instance, a median-priced condo in Boston is over $700,000, compared to just $192,000 in Gainesville.
In Berkeley, buying a condo is $85,000 more than renting over three years. In Stanford, it’s $75,000 more. Harvard students won’t face quite so high a difference in Cambridge, MA, but they’d still be out $50,000 if they opt for buying a condo instead of renting.
Irvine and Boston round out the top five most expensive college towns for buying a condo. UC Irvine students will pay roughly $100,000 in rent over three years, compared to $149,000 in mortgage payments. Boston condo buyers face a similar setback, with mortgage costs exceeding rent by more than $38,000.
The Reality Check on Student Condo Ownership
Over the long run, buying a condo apartment can save money. But there are significant financial hurdles college students face before they can realistically purchase one.
For one, they’ll need to be able to save for a down payment, ideally 20% of the purchase price. For a college student likely earning minimum wage, saving that amount is nearly impossible.
As well, even when the monthly mortgage payment is cheaper than the monthly rent, it is still a recurring expense that requires long-term financial planning. Property taxes, condo maintenance fees, and condo insurance will also need to be factored into your budget. Students who need to prioritize classes and studying over work may struggle to keep up with monthly payments.
As a result, condo ownership is generally limited to students whose parents can provide financial support. Parents might help with the down payment while the student covers the mortgage, or they may pay the entire bill themselves, with the student assuming responsibility for the mortgage after graduation.
This means lower-income students are more likely to remain renters, while students from higher-income families can start building equity earlier, which in turn widens the gap between the two groups.
Should You Buy Your College Student a Condo?
If you’re a parent already paying for your child’s college tuition, then buying a condo may seem like an unnecessary extra cost. But it’s not always as impractical as the numbers seem.
On paper, the monthly rent often looks cheaper. It’s only after you add up the cost of renting over three years that you see just how high the total rent paid can be. If the cost of renting for three years is similar to the cost of a mortgage, investing in a condo might be the smarter choice for your family.
Of course, it’s important to weigh personal risk factors first. What if your child graduates early, transfers schools, or moves to another city after graduation? Having a contingency plan for these scenarios can help you decide whether buying or renting is the better fit.
Some families may choose to sell the condo once their child graduates, potentially earning back money through appreciation. By contrast, after three years of renting, you walk away with nothing. Alternatively, some families may keep the condo as a long-term investment to either rent it out for passive income or allow their child to continue living there while taking over the mortgage.
The choice to rent or buy is a complicated one that requires careful consideration of your personal risk factors, financial well-being, and long-term goals. If you’re unsure, working with a qualified real estate agent may provide deeper insight into what’s best in your situation.
Curious to see what condos are available in your child’s college town? Start your search today! You might just find the condo you’ve been dreaming of, and see firsthand how renting vs. owning in college towns compares.
Sources and Methodology
Average one-bedroom rental prices were sourced from Zumper.
Median condo prices were sourced from a combination of the National Association of Realtors and local real estate boards, including Florida Realtors, Greater Nashville Realtors, and Colorado Realtors.
Mortgage payments are based on a 20% down payment, a 30-year fixed rate of 6.58%, and the median condo price in each city.
