Lizzy Alfs

lalfs@tennessean.com

Steve and Debbie Wolenberg wanted to cover their daughter’s housing expenses while she worked grueling hours to earn her medical degree from Vanderbilt University.

They shelled out $2,000 a month during the first two years for their daughter’s shared two-bedroom apartment in Hillsboro Village. That’s when they realized they could benefit financially from buying a two-bedroom condo on Long Boulevard, saving about $800 a month with a cheaper mortgage payment.

They have the option to sell the condo later, rent it or use it themselves when they visit Nashville from Richmond, Va.

“We knew we were talking about quite a few years and we just thought it made a lot more financial sense (to buy). If you are in a position where you can make a down payment, we thought we would benefit in the long run,” Debbie Wolenberg said.

The Wolenbergs are part of a growing number of parents choosing to buy homes or condos in Nashville for their children to live in during college. Homeownership can provide financial benefits as apartment rates reach new highs and to help offset the rising costs of higher education.

It’s not uncommon for millennials to get help from a parent on a down payment or monthly housing costs. In fact, 27 percent of those 35 years old and younger said their source for a down payment was a relative or friend, according to the National Association of Realtors. Of those, 23 percent said the down payment was a gift and 4 percent said it was a loan.

“We have seen that (trend) for a number of years,” said Jessica Lautz, managing director of research for the National Association of Realtors.

For the Wolenbergs’ daughter, Kelly Wolenberg Harris, who now lives in the condo with her husband Nick Harris, covering her housing costs allowed her to focus on her tedious medical program, which required working long and odd hours. Wolenberg Harris is now an intern physician in the Vanderbilt Pediatrics Residency Program. Her husband is in the MD/PhD program at Vanderbilt's medical school.

"Having our housing costs covers helps tremendously, especially now that I am beginning to pay off student loans," Wolenberg Harris said.

Sydney Grigg of Zeitlin & Co., Realtors said she has seen more “parent investors” in the Nashville market in recent years choosing to buy homes for their children versus rent, a trend she attributed to the city’s climbing rental rates.

“I think because the rental market has become so expensive, when a student is discussing finances with their parent and they lead into what it costs to rent here, that’s probably why parents are saying, ‘Maybe we should look into making a purchase,’” Grigg said.

Average apartment rates in Nashville have increased nearly 35 percent since 2010 to $1,044 a month, according to the Greater Nashville Apartment Association. Rents are significantly higher in the West End/Downtown neighborhoods, near Vanderbilt and Belmont universities, with average rates of $1,651 in 2015. Many of the new buildings coming online in near-downtown neighborhoods are high-end, which skews average rents in those neighborhoods.

Off-campus housing surrounding Vanderbilt is considered pricey when compared with other elite universities in the U.S., according to a Zillow analysis. Students should expect to pay about $1,520 a month for an apartment in 2017. That’s significantly lower than the priciest college market — Stanford University in Palo Alto, Calif. at $6,139 a month — but more than double the rental rates for students at the University of Notre Dame in South Bend, Ind. at $723 a month.

Zillow predicts Nashville rental rates will appreciate by 4.8 percent in 2017.

The single-family housing market is also red hot in Nashville right now, but Grigg said parents can “park their money” in a home or condo while their students attend college.

The median residential price for a Nashville-area single-family home was $256,900 during September, up 8 percent from a year ago and up only slightly from August, according to the Greater Nashville Association of Realtors. The median price of a condo was $188,495 last month, up 10 percent from a year ago.

John Fairhead of Village Real Estate said it’s common to pay less on a mortgage in the Nashville market than on monthly rent. For that reason, he works regularly with parents of college students, especially in neighborhoods such as Midtown, which is located within walking distance to Vanderbilt and Belmont.

“Especially in the springtime, it’s very common to have college-aged buyers and their parents making these transactions. It’s a significant part of the market, especially condos, especially Midtown and especially in March, April, May and June,” Fairhead said.

Fairhead said sometimes college students have roommates who make monthly rent payments to the parent investors, which helps parents pay the mortgage.

For many parent buyers, a major consideration is the overall safety of the building and neighborhood.

That was a deciding factor when the Wolenbergs purchased their condo on Long Boulevard. The added bonus: neighboring condos are selling between $40,000 and $60,000 more than what the Wolenbergs paid for theirs two years ago.

“We’re very satisfied,” Debbie Wolenberg said. “We live long distance and it has worked out exactly as we envisioned and hoped and it has been an extra benefit for us that the real estate on Long Boulevard has gone up. That’s been the icing on the cake for us.”

Estimated off-campus housing costs by college in 2017

Stanford University: $6,139 per month

Harvard University: $2,594 per month

Georgetown University: $2,568 per month

University of Michigan: $1,846 per month

Vanderbilt University: $1,520 per month

Brown University: $1,425 per month

Duke University: $1,286 per month

University of Pennsylvania: $1,223 per month

Washington University: $881 per month

University of Notre Dame: $723 per month

Source: Zillow analysis of off-campus housing costs for colleges on U.S. News & World Report's Best Colleges list

Reach Lizzy Alfs at 615-726-5948 and on Twitter @lizzyalfs.



