College students make Downtown home
When Theodora Nemeth moved back to the Twin Cities from New York City to attend medical school at the University of Minnesota last year, she started hunting for an affordable housing option that didn’t feel like a dorm.
She settled on a small 537-square-foot condo at the Pinnacle, 20 2nd St. NE, with a patio overlooking Downtown’s skyline. Nemeth, 26, who plans to move into her new home in mid-March, said the neighborhood has more appeal than areas near campus.
“I really feel that, as an older student, the neighborhood where the Pinnacle is has a lot more to offer,” she said.
Nemeth is part of a growing number of college students choosing Downtown condos over dorms and on-campus apartments and in many cases, their parents are helping foot the bill.
“It was a better investment in the long run,” she said. “The price was right, and I’m fortunate to have a relationship with my parents where we can do this together.”
Nemeth’s parents contributed the down payment and she plans to use her student loans to pay the mortgage. Her father, Frank Nemeth, an architect at Downtown-based HGA Architects, said he feels good about the purchase. The condo was priced under $200,000 — a rare find in Downtown’s pricey condo market.
Suzanne Backes, a sales manager at Skyscape, 10th Street and Portland Avenue, said parents are helping college students and recent graduates buy condos at the 26-story condo tower under construction in Elliot Park.
Some parents are buying two-bedroom units so their children can have one or two roommates, she said.
“The parents figure that it is a better atmosphere than a dorm. They have amenities there,” she said, pointing to wireless Internet and a business center as draws for buyers. “They are set up to focus on school, which is not always true in a dorm atmosphere.”
Many parents see the purchase as an investment, too, she said. Some parents end up gifting the condo to their children while others plan to move in themselves after their children finish school.
Sibtain Ahmed is a recent University of Minnesota graduate who bought a Skyscape condo with his parents. He’s living in Plymouth until his condo is ready in 2007.
Ahmed, a 26-year-old auditor for Downtown’s Target Corp., has lived in Loring Park before and said he’s drawn to urban living. “I’ve really enjoyed the whole living-Downtown experience,” he said.
He purchased the condo in 2005 with help from his parents on the down payment, which he intends to pay back by the time he moves into the Elliot Park tower.
Several parents have checked out floor plans with their college-aged children at the Mill Trace Condominiums under construction on the edge of Downtown in the Marcy-Holmes neighborhood, said Dan Kuch, who heads the project’s sales team.
Employees at the University of Minnesota have also purchased units at the 50-unit project. Many buyers are tied to the university and are drawn to the maintenance-free condo lifestyle, he said.
Fritz Kroll, a real estate agent for Edina Realty who markets several Downtown condo projects, said he’s seen interest from parents looking for housing for the college students at projects in the North Loop and Downtown’s East Bank.
The Phoenix on the River, a 15-story tower slated to rise next to St. Anthony Main, has attracted several buyers affiliated with the university — including faculty and graduate students, he said.
Many of the buyers are buoyed by relatively low interest rates and a belief that their new condos will appreciate at a steady rate. They can also write off mortgage and loan interest costs on their taxes.
The trend might level off, however, if interest rates keep ticking up as they are projected to this year.
According to a National Association of Realtors report released last year, about 6 percent of investment buyers purchased a second home for children attending school — accounting for 169,000 properties across the country.
Real estate experts say buyers should be prepared to hold onto the property for more than a few years in case of a market dip. Renting is also an option for buyers if the students choose to move out of the condo.
However, some heed caution and say that buyers shouldn’t overestimate the possible savings and potential appreciation. It can take six years or more to recoup the costs of purchasing a condo.