Ithaca, N.Y. — Home prices in Ithaca have soared by 51 percent since 2004, the second largest such increase of any city in the country, according to a report released this month by a Los Angeles-based consulting firm.
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The firm, Clear Capital, said that the rise was the result of a “heavy college” influence:
“Sustained gains at the (Metro Statistical Area)-level are a direct benefit of metros with heavy college influences. The Ithaca MSA, home to Cornell University and Ithaca College, has seen home prices rise a stunning 51% since 2004, putting the metro at the head of the class nationally. And it’s not just metros in the Eastern Region seeing college pay off.
In Boulder, home to the University of Colorado, home prices are up an impressive 26% since 2004. These markets each maintain a foundation of sustained demand from students hungry for an education and in need of a roof over their heads.
The report goes on to note that despite the clear economic advantages created by colleges, “student debt could create a drag on the overall housing recovery:”
The symbiotic relationship between university life and home prices, however, is localized. Now a full year into a cooling recovery, stronger demand from first-time homebuyers is a prerequisite to a sustainable recovery as investor demand dwindles.
College graduates who feel confident enough in their employment prospects and the housing market to attempt to qualify for a mortgage will have to grapple with an average of more than $30,000 in existing student debt. With student debt now in excess of $1 trillion and growing, the housing market faces demand headwinds at a crucial transitional point in the recovery.
Here’s the graph showing Ithaca with the highest second rise in home prices in the country: