As Alabama students look for off-campus housing this fall, real estate experts warn that rental prices are on the rise in college towns. Researchers report this is especially true for cities that make up the Southeastern Conference, or SEC. The Waller, Weeks and Johnson Rental Index compiled data from real estate marketplace company Zillow and discovered that the average monthly rental price in SEC college towns increased 8.22% between June 2022 and June 2023. That is double the national increase in rental prices, which is currently 4.11%.
SEC college towns with the biggest jump in average rental prices were:
- Oxford, MS: 20.94% increase in average rental prices
- Starkville, MS: 14.19% increase in average rental prices
- Columbia, MO: 9.79% increase in average rental prices
Cities with the smallest jump in average prices were:
- Baton Rouge, LA: 0.81% increase in average rental prices
- Nashville, TN: 2.33% increase in average rental prices
- Gainesville, FL: 5.58% in average rental prices
Experts also studied the SEC college towns with the cheapest and most expensive average rental prices overall. The Southeastern cities with the most expensive prices overall were:
- Nashville, TN: average rental price is $1,966
- Knoxville, TN: average rental price is $1,822
- Oxford, MS: average rental price is $1,714
Cities with the least expensive prices overall were:
- Columbia, MO: average rental price is $1,083
- Starkville, MS: average rental price is $1,120
- Lexington, KY: average rental price is $1,421
Alabama’s SEC college towns—Tuscaloosa and Auburn—sat in the middle of the pack. Tuscaloosa had an average rental price of $1,486, which is a 7.8% increase from prices last year. However, students and residents living in The Plains can expect to pay more. The average rental price in Auburn was $1,606, a 9.68% increase from prices last year. Bennie Waller is a finance instructor at The University of Alabama. He is also one of the creators behind the Waller, Weeks and Johnson Rental Index. Waller said though prices are higher in these two cities, this is not all bad news.
“I know that this is a concern for many people [who] are moving to the area or they're relocating because of jobs or schools, but it’s not a bad thing,” he said. “It just means that both of these fine academic institutions are growing. They are attracting more and more and better and better students. It just takes time for the infrastructure to catch up with all the growth that we're seeing.”
While SEC college towns like Tuscaloosa and Auburn are seeing rental price increases, Waller said this is true for most parts of the country.
“The fact that rental prices are increasing isn't just specific to SEC college towns,” he said. “We're seeing rental prices go up across the country. Fewer people are buying homes today [due to] increased mortgage rates, decreased supply of homes that are available to these individuals and, also, the inability to qualify at 7.5% interest rates. More and more people are renting properties, and fewer and fewer people are buying properties given the current economic environment and the uncertainty that's associated with it.”
Not only are average rental prices increasing across the county, but Waller said SEC rental prices are still cheaper than many parts of the nation. The average monthly rental prices in all SEC cities was $1,541. This is lower than the national average of $2,054. No SEC college town has surpassed this national average, and average rental prices in all SEC cities are about $500 cheaper than that average.
“I think that we're fortunate in the South,” Waller said. “Even though COVID played a huge part in restructuring real estate across the country, it was less impactful here. That’s driving a lot of influx into cities in the South, which includes most or all of our Southeastern Conference schools. But even though the [national] average is double [our] average, that's not a bad thing. That just means more people are moving into these cities, making demand higher for properties, which is driving up rates. That's going to spawn additional infrastructure improvements, building, new jobs, and making these areas even more inviting than they already are.”
However, Waller and his fellow researchers did more than study SEC college towns. They also studied 12 cities across Alabama and other metropolitan areas within the U.S. Based on their findings, the cities in Alabama with the biggest jump in average rental prices were:
- Florence, AL: 14.64% increase in average rental prices
- Decatur, AL: 12.95% increase in average rental prices
- Auburn, AL: 9.68% increase in average rental prices
Alabama cities with the smallest jump in average rental prices were:
Huntsville, AL: 2.37% increase in average rental prices
- Montgomery, AL: 3.35% increase in average rental prices
- Daphne, AL: 4.26% increase in average rental prices
Cities in Alabama with the most expensive rental prices overall were:
- Daphne, AL: average rental price is $1,705
- Auburn, AL: average rental price is $1,606
- Huntsville, AL: average rental price is $1,536
Alabama cities with the least expensive rental prices overall were:
Talladega, AL: average rental price is $1,029
Florence, AL: average rental price is $1,105
Mobile, AL: average rental price is $1,234
Looking ahead, Waller said average rental prices are only going to increase.
“The Federal Reserve just raised [interest] rates again [on July 26] and mortgage rates followed,” said Dr. Bennie Waller, a real estate researcher and finance instructor at the University of Alabama. “You’re going to see a strain on the housing market. People are not willing to sell their homes that have a 3% [interest] rate to trade up to a 7.5% rate. It’s just not financially feasible. The only people making those kinds of moves, typically, are in some kind of lifestyle crisis, whether it be a divorce, death in the family or a job relocation that was unexpected.”
Despite the rise in rental and home prices nationwide, Waller said he hopes this research will positively impact Alabamians from all walks of life.
“This is important for anybody, particularly young people who are starting careers,” he said. “We think that parents can look at this data, if they are sending their kids to these towns, and they can make an informed decision. ‘Should we think about buying a property, given that rent prices are at this level? Or does it make more sense for us just to rent over this four year period? It also is important for people who are relocating to these areas that are just main street workers. People [who] work at the university. People who work at the hospital. People [who] work at Walmart or Target.”
The Waller, Weeks and Johnson Index is fully available online. Readers can visit the Alabama Center for Real Estate website, which is located on the University of Alabama’s Culverhouse College of Business landing page for more information.
