Westwood is the most unaffordable college town in the U.S. for off-campus living: report
Off-campus student housing can be rewarding for investors — that is, if they can stomach the toga parties.
UCLA’s hometown of Westwood, for instance, is America’s most expensive college town, with off-campus rents 80 percent higher than the Greater Los Angeles market rate, a new report has found.
Looking at the median rents of single-family properties within a two-mile radius of more than 300 universities, investment management firm HomeUnion compared them with market rents in the metro area. The result is a ranking of the most unaffordable schools for off-campus living.
At the top of the list, the Bruins pay a median rent of $4,343, more than $1,900 more than rent in the L.A. Metro area, according to the report.
But this isn’t surprising. Westwood overall is a notoriously pricey rental neighborhood, where three-bedroom apartments average a whopping $6,152, according to Zillow.
“Going into this, I could’ve guessed that UCLA was the top of the list,” Steve Hovland, HomeUnion’s director of research, told The Real Deal. “[Westwood] is not expensive just for students, it’s expensive for everyone.”
That said, off-campus student housing could be a rewarding investment for investors with a high risk tolerance, he added.
“It is a little more risky, because of who you’re renting to,” he said, “But if you’re consistent and pick the right tenants, there could be great returns.”
Rates for off-campus housing tend to be higher than the market rate because of some added premiums for student tenants, such as proximity to campus and the ability to add roommates.
“The student housing market is very attractive to investors, and we have a lot of inquiries about it,” Hovland said. His firm, based in Irvine, specializes in single-family rental investments.
HomeUnion’s policy is to neither encourage nor discourage clients to invest in off-campus student housing, he added.
Tailing Westwood, the second- and third-most expensive college towns are Palo Alto, home of Stanford University, and Miami, which houses its namesake university. Median rents near Stanford are 63 percent more expensive than the San Jose market rate. For Miami, the discrepancy is 44 percent.
But not every college town is pricier than its greater metro market. Just across town from UCLA, the University of Southern California is a prime example of an off-campus area in which rents are cheaper than the metro rate. If USC students live within a two-mile radius of campus, they pay a median of $1,985 — more than 16 percent less than L.A.’s rate of $2,378.
Turns out, student housing inventory across the country has lagged behind college enrollment rates. As a result, the student housing sector is certainly booming. Shares of major student housing landlords like Education Realty Trust American Campus Communities has significantly risen since last year.