Parents buying homes for kids at college

Ashley Jordan has lived with her college roommate for most of her life, so not much changed when she moved into a College Park condo with her brother Kyle last fall — except their housing costs got a whole lot cheaper.

Miss Jordan’s parents bought a $185,000 condo where the siblings could live while they attend the University of Maryland. They decided it was the financially smart thing to do.

“In today’s economy, it literally costs less to buy this condo than put them on campus,” said their father, Troy. “We save money now. We potentially make money later. They’re in a better environment. There’s all upside, no downside to this.”

The Jordans are one of a growing number of families across the nation who are buying homes for their children to cope with the ever-climbing costs of a college education.

Rather than pay rent, some families collect it. And after graduation, many sell the home and make a profit, said P.L. “Skip” Singleton Jr., a D.C. Realtor.

“If you’re paying rent, you know it’s going out the door, all of it, every dollar is out the door,” said Mr. Singleton, who works for DC Living Real Estate.

Basic math is what pushes many students and parents into buying college real estate.

In the District, it’s increasingly difficult for students to find on-campus housing because dormitory space is limited, said Kimberly James, an agent with Long & Foster. Some schools, such as the University of Maryland at College Park, limit the number of upperclassmen who can live on campus.

Even if on-campus housing is available, dorm rooms aren’t exactly cheap. At four-year public colleges, the average annual cost for room and board jumped 5.4 percent to $8,193 this school year, according to a recent College Board survey. At some private schools in the District, students can pay nearly $50,000 to live on campus for four years.

The result is a college housing system that encourages large numbers of students to live off campus. As the housing market began to bottom out last summer, leaving some cities with houses that cost less than cars, students who used to rent rooms in group homes began to buy their own at bargain-basement prices and manage them for profit, real estate agents said.

The market is flooded with cheap real estate. A prolonged recession, a housing market collapse and an unemployment rate headed toward double-digit territory have produced a national avalanche of mortgage defaults and foreclosures. While many of these cases go straight to foreclosure, sometimes banks allow third parties to purchase a home for less than the balance on the mortgage. This process, called a short sale, allows the homeowner to avoid bankruptcy while guaranteeing the bank a sum of money it might not have collected from a foreclosure.

The federal government, meanwhile, is spurring demand for low-cost housing by offering an $8,000 tax credit to first-time home buyers. That program was set to expire Nov. 30, but Congress voted Thursday to extend the tax break until June 30 and expand it to include higher-income buyers who already own property.

All things considered, it is now cheaper for many families to buy rather than rent, real estate agents and buyers said.

“If you’re renting right now and you know you’re going to be here for five years, you should be buying,” said Ivan Katz of Fairfax Realty.

Family investment

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