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2023 Study: Which College Towns Have the Best Real Estate Investment Potential

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Key Findings

  • The average price of a home in a college town in 2023 is $377,800, 7% lower than the national average of ($406,200), according to Redfin
  • Homes in college towns have appreciated by 4% in the last 12 months, compared to a 1.6% growth rate in home prices across the United States 
  • The best college town for real estate investment is Indiana, PA due to relatively low home prices ($160k), their solid projected growth (+12%), and potentially high rental income
  • Gary, IN is the least expensive college town in the United States with an average home costing around $71,000 in 2023
  • Among college towns, Athens, GA is the hardest real estate market to get into, with an average home price of $355,400 and 64 new listings over 100 home sales

As a new crop of college students start class this September, the cost of attending college has never been higher. At four-year colleges, room and board alone costs around $12,000 to $13,000 per year. 

That cost is pushing some parents towards buying a home close to their child’s college campus — even if the school might be far away. Renting in college towns remains expensive, but buying a home and renting out part of it could help cover mortgage repayments and so long as prices keep appreciating, it can be a good investment. 

In this study, we rank over 500 college towns on their real estate investment potential based on current home prices, historical and projected growth, housing availability, and potential rental income. Read on to see which college towns score the highest, and where you might want to consider making your new home. 

Prospects of Prosperity: Best College Towns for Real Estate Investment

a photo of a river set next to a trail on the bank. It's fall, and the grass is yellow and trees are different colors
A riverside park in Brownwood, TX, one of the best college towns to invest in real estate

This was our approach to ranking the 580 college towns on the following real estate metrics:

  • Median home price (the lower, the better)
  • Price change in the last 12 months (the more it’s grown, the better)
  • Projected growth in home prices over the next five years (the higher, the better)
  • Favorable housing supply-to-demand ratio (the more new listings for every home sold, the better)
  • Potential rental income (the higher the average rent in the town, the better)

On the balance of these factors, the college town with the best potential for real estate investments is Indiana, PA, scoring 93 out of 100 on our combined scale. 

Home to the Indiana University of Pennsylvania, this town’s home prices average around $160,500 in 2023. Home prices grew 19% in the last 12 months and are projected to grow by 12% more over the next five years. Combined with high levels of housing supply and a potentially high rental income, these factors put Indiana, PA in the #1 spot in our ranking.

 

“The most affordable college towns are largely concentrated in the Midwest, with 7 out of 10 being either in Illinois or Indiana.”

 

McPherson, KS is in second place, with house prices slightly higher ($179,800) and recent growth slightly slower (14% year-over-year). Two more towns from Kansas made our top 10 — Winfield, KS (#5), and Atchison, KS (#10), both with a median home price of around $150,00 and a healthy supply of homes for sale.

Geographically, the 10 highest-ranked towns stretch across the eastern part of the US. The furthest south is Brownwood, TX (#3) where homes are expected to appreciate 20% over the next five years. In the north, there’s Williamsport, PA (#6), where a typical home costs $136,800.

Explore our interactive map below to see what other towns made our top 10.

Here are the top 10 college towns in ranking order:

Rank Town Total Score
1 Indiana, PA 93.0
2 McPherson, KS 92.1
3 Brownwood, TX 88.8
4 Arkadelphia, AR 87.8
5 Winfield, KS 87.3
6 Williamsport, PA 86.8
7 Clinton, SC 86.6
8 Murray, KY 86.1
9 Lubbock, TX 86.0
10 Atchison, KS 85.7


To see where all 580 colleges we ranked are located, check out the full map below. You can also find the college town with the highest real estate investment potential in your state!

An A+ in Affordability: College Towns with Low-Cost Homes

Comparing college towns from a pure price standpoint, there’s no rivaling Gary, IN (#291) — home to Indiana University — where houses sold for a median price of $71,000 in 2023. 

The most affordable college towns are largely concentrated in the Midwest, with 7 out of 10 being either in Illinois or Indiana. Notable among them are Marion, IL (#378) where homes are projected to appreciate 17% by 2028, and Pine Bluff, AR (#30) where the supply of homes is far greater than demand.

In 7 out of the 10 least expensive college towns, the median price of a home in 2023 is below $100,000.

Growing Strong: Top College Towns for Projected Home Value Growth

Overall, home value in college towns has grown by 4% in the last year — higher than the US average of 1.6%. Looking at home price dynamics in college towns, the clear winner is Rock Hill, SC (#217), where both Winthrop University and Clinton College are located. Here, home prices are poised to rise by 33% over the next five years — the highest among college towns in our dataset.

That said, homes in Rock Hill, SC are fairly expensive ($315,900), which makes towns like Mount Vernon, OH (#26), and Anderson, IN (#28) better investment prospects overall with homes priced at $195,400 and $142,300, respectively. 

Another interesting entry on this top 10 list is Buffalo, NY (#85), where the projected 5-year price growth is at 27%, homes go for $183,00 and rents reach an average of $1,349.

Lock and Key: Hardest College Towns Real Estate Markets to Get Into

areal view of athens, GA and a university football stadium

An increasing number of college-goers and their parents might be considering buying a home in a college town. But, much like with college admissions, getting into one might prove a trying task. In most college towns, the demand for homes far outstrips supply.

This is particularly true for Athens, GA (#316) — the home base of the University of Georgia. With only 64 new listings for every 100 home sales and most homes going off the market in only 24 days, buying a home in this college town can be incredibly tricky.

And no wonder! Homes there are valued 21% higher than they were last year and are projected to appreciate by another 7% by 2028.

The second toughest college town to break into is another town in Georgia — Valdosta, GA (#315). Homes here typically cost $180,900 but housing supply is dwindling fast. For every 100 homes sold, only 74 are listed and they usually get sold within 35 days.

 

“Homes in college towns have appreciated by 4% in the last 12 months, compared to a 1.6% growth rate in home prices across the United States” 

 

Two Idaho towns are among those where housing availability is the most scarce — Nampa, ID (#555) and Caldwell, ID (#516). Even though homes here aren’t selling that fast (≈55-60 days), new listings are at a deficit compared to home sales. 

Even though homes in these towns don’t come cheap ($401,300 and $366,300, respectively), rents are high ($1,500+) and in both towns, homes are projected to appreciate by more than 20% in the next five years. 

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Compare and Contrast: All College Towns, Mapped and Ranked

You can Browse all the college towns we analyzed along with their real estate data using the interactive table below.

Sources and Methodology

College towns were selected using the Integrated Postsecondary Education Data System (IPEDS) available via the National Center for Education Statistics (NCES). To be included in the ranking, a college town had to have at least one four-year institution, granting Bachelor-level degrees or higher, where 50% or more students were full-time.
College town population figures were looked up using the Census Bureau estimates. Places with a population of 500,000 or more were excluded.
The total “Best for Real Estate Investment” score has a maximum of 100 points and is based on a selection of six factors, which were weighted as follows:
    • Home Price (30 points) = Median home price in 2023
    • Home Price 12-Month Change (10 points) = Average percentage change in home price compared to 12 months ago
    • Market Projection (15 points) = Projected percent increase or decrease in home price in the next five  years 
    • Real Estate Availability (15 points) = Number of homes sold per 100 new listings 
    • Days On The Market (10 points) = Median number of days a listing spent on the market in 2023
    • Rent (20 points) = Median rent of a residential property in 2023
Figures on the home price in 2023 and its year-over-year change, the number of homes sold, the number of new listings, typical number of days on the market were all taken from Redfin. Rent data was sourced from Zillow’s Housing Data and Rental Market Trends. Five-year market projections were taken from WalletInvestor’s Housing Market Forecast.
Towns with negative 5-year home price growth projections and those with fewer than 50 homes sold in 2023 were excluded from the analysis.

2023 Study: Majority of Renters Priced Out of Homeownership in 78% of All US Metros

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Key Findings

  • 63% of renters across the biggest U.S. metropolitan areas are priced out of home ownership (up from 61% last year)
  • The majority of renters can’t afford to own a home where they live in 205 out of 260 metros (78%)
  • At least 90% of renters are priced out of home ownership in 16 American metro areas, nine of which are in California
  • In two metropolitan areas, Prescott, AZ and San Luis Obispo-Paso Robles, CA, less than 1% of renters would be able to afford buying and owning a median-priced home
  • Kalamazoo-Portage, MI, Jackson, MI, and Johnstown, PA are the only three metros where more than 80% of renters could afford to own a home

In 2022, a study by Porch, a nationwide home-service company, found 61% of renters in the U.S. were priced out of homeownership, meaning they were not able to afford to buy and own a home in the same city where they rented. 

In 2023, applying that study’s same methodology to the most recent home-owner data resulted in an estimate of 63%. In other words, today, nearly two-thirds of renters can’t afford to buy a home in the metro where they live.

To gain a better understanding of this huge number, we examined housing affordability by comparing renter incomes to home prices using the most recently available data for 260 metropolitan areas in the United States.

Home Prices Have Dropped, Why Aren’t Homes More Affordable?

home ownership study porch hireahelperEven though home prices have been falling for the better part of last year and then continued their decline in 2023, housing affordability hasn’t improved. In fact, things have gotten worse for prospective homeowners over the last year. 

At the end of last year, the National Association of Realtors’ Housing Affordability Index reached its lowest point since 1965. It hasn’t been this hard for a family with an average income to qualify for a mortgage loan on an average-priced home in over six decades.

Why hasn’t a drop in home prices led to greater affordability? 

For starters, mortgage interest rates are at 6.65% according to Freddie Mac — the highest they’ve been since the Great Recession. This means potential mortgage repayments for buyers would be a lot higher than they would have been even just a few years ago.

 

“It hasn’t been this hard for a family with an average income to qualify for a mortgage loan on an average-priced home in over six decades.”

 

Secondly, there aren’t enough affordable starter homes. In part, that’s because there are simply not enough homes for sale in general after a pandemic buying frenzy. On top of that, there is simply put, a lack of cheap new homes. Roughly 63% of all U.S. homes were selling for over $400,000 by the end of 2022.

Finally, there’s the pervasive issue of inflation and the increasing cost of goods, services, and rent, leaving less money in Americans’ pockets. Despite dropping to 6.5% in recent months, it’s still way higher than the pre-pandemic 1-2% rate.

Now that we know more about why housing is less and less affordable, let’s get into where all this leaves American renters wanting to buy a home in 2023.

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Further Out of Reach: The Majority of Renters Can’t Afford To Own a Home in 205 out of 260 Metros

To estimate the percent of renters priced out, we assumed a scenario where a first-time buyer put down 6% of the home value, obtained a 30-year fixed-rate mortgage with a 6.65% interest rate (an average rate), and aimed to keep mortgage repayments to a maximum of 30% of the household income, as per the famous Housing and Urban Development guideline.

 

“…in two major U.S. metropolitan areas, the share of renters priced out of home ownership is a staggering 99%!”

 

With current income levels and home prices, this scenario is completely unattainable for the majority of renters in 205 out of 260 metropolitan areas in the United States. That’s in nearly eight out of the ten (78%) most populated areas in America where renters have no realistic chance at home ownership.

 

In the Porch study from 2022, there were 184 metros where home ownership was unaffordable for 50% or more renters living in them. 

This overall increase seems to suggest the affordability crisis isn’t just deepening in areas already struggling with affordable homes, but is actually expanding to more metropolitan areas across the country.

Mission Impossible: In Two Metros, Home Ownership Is Unachievable for 99% of Renters   

Last year’s study uncovered 13 major U.S. metro areas where at least 90% of renters wouldn’t have been able to afford home ownership based on their income. This year, there are 17 of them!

What’s different about this year’s findings, however, is that in two major U.S. metropolitan areas, the share of renters priced out of home ownership is a staggering 99%!

Those areas are San Luis Obispo-Paso Robles, CA and Prescott, AZ, where the home prices are prohibitively high to be affordable for the absolute majority of people who rent in these areas. Homes in San Luis Obispo and the area being unaffordable is nothing new, but affordability dropping in Arizona and Prescott, AZ specifically is something that’s started happening recently, according to local reports.

 

Of the 17 places in the U.S. where the income of 90% of renters would prevent them from being able to afford a home, nine are in California with cities like Los Angeles (94.3%), Salinas, CA (92.9%) and San Diego (92.6%) all with an appearance on the list.

Hawaii and Colorado each have two metros on this list, but, rather surprisingly, so does Charleston-North Charleston, SC, where some 91.6% of renters are priced out of home ownership. Turns out, housing has been too expensive in the area for a while, but the local government does seem to be stepping in and building more affordable homes, according to reports.

The Modest Midwest: Two Michigan Metros Among Three Most Affordable Places for Renters

Like last year, Johnstown, PA leads the pack in terms of affordability of local housing for those on typical renter incomes. Nearly 90% of people who rent in the area earn enough to cope with the costs of home ownership if they were to buy a home in the area.

The only two other metropolitan areas where owning a home without repayments crosses the affordability threshold of 30% of the household income are in Michigan. Those places are Jackson, MI, (11.9%) and Kalamazoo-Portage, MI (13.3%).

Looking at the 10 most affordable areas for renters looking to jump onto a housing ladder without it breaking the bank, five are either in Michigan or Illinois, while a total of three exist in Pennsylvania.

See All the Data for Yourself

To see how affordable homeownership is for renters in your city or metro, check the table below. 

Methodology, Data Sources, Calculations and Assumptions Made

Income levels of renter households and their % of all households in each metropolitan area were taken from the 2022 release of the Annual Social Economic Supplement to the Current Population Survey, as available via Integrated Public Use Microdata Series (IPUMS). Home prices were taken from Zillow.
% of renters “priced out” was calculated as the percentage of renters in each metropolitan area whose income wouldn’t be sufficient to keep potential mortgage repayments to 30% of gross monthly income (Source: United States Department of Housing and Urban Development). 
Mortgage repayments were estimated using the following assumptions:

Illustrations by Daniel Fishel

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