A study on housing prices in football-intensive college towns listed New Brunswick among the most expensive such markets in the U.S., but one real estate agent said the price estimates for the home of Rutgers University are too high.
The study, by Parsippany-based Coldwell Banker, compared housing prices in the cities surrounding 117 colleges and universities with Football Bowl Subdivision — formerly called 1A — programs. New Brunswick was the 34th most expensive, with the average price of a three-bedroom, two-bathroom home estimated at $207,275.
The least-expensive college town to own an average-sized home was Memphis, with the average price being less than $90,000. Most expensive was the Westwood neighborhood of Los Angeles, home to UCLA, where three-bedroom homes cost more than $1.2 million.
But Bruce Parker, owner of Re/Max Best Realty Highland Park, said the estimated average price is a little high, considering home prices in Middlesex County and the surrounding areas have dropped 10 percent since the last quarter.
He also said demand for rental housing around Rutgers has declined in the past few years due to new dorm construction by the university, new apartments and condos built in the city and more students commuting from local towns.
“The real hardcore investors are buying in the off neighborhoods, and typically they’re renting to very low-income people — and many instances, they’re renting to section 8 recipients,” Parker said. “They’re very good rentals because you get your rent every month from the state, you don’t have to worry about collections.”
Parker said homes for sale around campus are valued at roughly 12 times the amount of annual rent collected, and the average for the city is 10 times the rent income. Prime investment pieces, he said, are valued around eight times the annual rent income.
The only investors who want to buy in the Rutgers area to rent to students are former students, Parker said.
“I believe they want to recapture their youth, live vicariously through the people they rent houses to,” he said. “They don’t buy much further than the sixth ward, because that’s what they remember. They’re not really thinking correctly as what’s the best financial real estate purchase — they’re thinking of an emotional real estate purchase.”