By Kevin Chiu
They’re not known for being real estate hot beds, but small college towns have been recognized by real estate investors for being the rare exception in economic downturns for decades.
San Luis Obispo, California and Auburn, Alabama deep in the heart of Dixie are an unlikely pairing that illustrates exceptions in America’s hard-hit housing market. But the two communities’ have more in common than just colleges. San Luis Obispo is the home of Cal Poly the highest ranked university in the California University system, and Auburn plays home to Auburn University.
Both universities behold leading agricultural programs covering thousands of acres dedicated to farming, are located away from major cities and are systematically sought out by many people who want to relocate to more rural communities away from the hustle and bustle of big city life. But still want the dignified edge college communities’ offer. They are also getting through the downward housing market with consistent, if not solid monthly home sales.
On the Central Coast of California’s Pacific Ocean, picturesque San Luis Obispo is forging ahead through the real estate downturn with less of an impact than the majority of the Golden State, battered by the highest number of foreclosures of any where in the country. With only 43,500 residents, San Luis Obispo is the county seat and benefits from sales taxes paid by more than 100,000 commuters, who come to the city to shop.
Auburn also benefits from sales tax proceeds from commuters attracted from outer-lying areas to its small but growing commercial businesses, and is also a city with less than 50,000 full-time residents. Neither city’s housing markets have suffered from double-digit annual housing deflation sustained in dozens of more urban markets elsewhere.
New home construction still exists in Auburn for homes priced under $135,000, a rarity in most other places. And there are few for sale signs indicating a marketplace that has weathered the real estate storm much better than many others.
Real estate agent Keith Jones says it’s more than the university that attracts new residents to Auburn. “People are coming to Auburn because of the public school system that is highly rated,” said Jones, who is associated with Weichert Stacey-Porter Realtors in Auburn. “As a smaller community, Auburn University attracts new students every year and they need housing.”
Home and condo sales in both San Luis Obispo and Auburn have slowed since the national real estate boom, but agents are consistently selling about the same number of properties monthly as rare exceptions in the nation’s real estate downturn.
However, even in Auburn home mortgages are still tougher to obtain. Jones had one client who was buying a $135,000 condo just a week ago and with a 780 FICO score, considered as excellent in lending circles with 20% down was unable to get financing from a national mortgage lender. “He cashed in a CD for $200,000 and closed on the place,” said Jones, which shows that the lending spigot is still tight even in little Auburn as a result of fall out from the credit crunch.