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The Choice to Rent or Buy


As room and board rates and rent prices continue to rise, some students choose buying a house instead of renting it.

Shelby Sparkman didn’t have a bed.

For the first three days that she lived in her small, white house on Celia Avenue, she slept on the floor in her bedroom on top of a folded blanket. When she got her bed, her home seemed more complete; even though the rest of the small house came completely furnished.  Everything was better.

With the cost to live on campus at many universities rising along with the tuition costs, many students are finding alternate ways to accommodate their living situations. The two most popular alternatives? Buying or renting a house or apartment.

For Shelby, buying a home about a mile and a half off of campus was the only option that crossed her family’s mind.

Shelby was accepted into Ball State University for the 2014/2015 school year, but spent her freshman year at Ivy Tech in Columbus instead because taking core classes at Ball State was too expensive for her. Owning a house with her sister has allowed the sophomore to now attend Ball State.

According to Collegeboard, the average amount a student pays for room and board for a public four year institution is $10,138. Ball State’s average for the 2015/2016 school year was $9,656 and is now $9,816. A study done by U.S. News shows that many students like Shelby are responding to this: 59 percent of students at Ball State live off campus.

Shelby’s mother Sandra bought her and her sister, Morgan, their house this past year and paid roughly $43,000 for it. The home came almost completely furnished, despite Shelby’s bed. Sandra pays the monthly mortgage payment of $385 and Shelby and Morgan pay for utilities each month totalling around $200. The house should be paid off in about 15 years.

Economics professor Cecil Bohanon agrees with the thought process behind this, saying that if the house sells on the market then it is a good idea.

“If you could buy a house for $40,000 and after all is said and done, the kid got to live there for free for four years. Then you sell it for $60,000, pocket the $20,000 difference. Sounds like a win-win deal,” Cecil said.

Shelby said that they considered an apartment as well as the house, but buying a house seemed like the better outcome.

“Together we would have been paying roughly around $700 every month. If you count my mother paying the mortgage, and then my sister and I paying the utilities, that’s still way under the monthly payment. It just seemed like the better idea,” Shelby said.  

However, for freshman Mackenzie Swenson, who will be moving into Beacon Hill Apartments with three of her friends this next semester, renting seemed like the better option.

Mackenzie always had it in the back of her mind that she didn’t want to stay in the dorms all four years. Going from never having to share a room with someone to suddenly having to wasn’t an appealing thought to her. She knew that after her freshman year of having to stay on campus, she would be moving into an apartment or a house. Her parents agreed and went searching when they found Beacon Hills apartments right off campus.

“The layout was great, the price was one of the best we looked at, and it’s so close to campus – almost better than the on-campus apartments,” Mackenzie said.

Mackenzie said that the perks of living in an apartment rather than the dorms include a breakfast bar open to tenants, individual parking spaces, a washer and dryer in the apartment, all utilities included except internet and cable, and each tenant has her own room.

Mackenzie will be sharing the four bedroom apartment with three of her friends, each of their monthly payments totaling to $410. Mackenzie’s mom calculated the difference that each student will be saving and it will total to about $4,000 in the long run, not including food costs.

A house was an initial option for Mackenzie as well. However, when she and her mom visited a home that housed about eight football players, Mackenzie wanted nothing to do with the houses.

“I remember telling my mom ‘I went to a party here. This house is gross.’” Mackenzie said that that is a huge downfall to the houses around campus. Because other students have lived there, the houses aren’t in the best shape. Another downfall is that the student has to take care of a lawn and do other additional tasks.

Cecil agreed with Mackenzie, saying that when living in an apartment, renters don’t have to deal with all the extra responsibilities that come with owning a house.

“If you have a house, you have to maintain it. That’s not costless,” Cecil said. “One of the nice things about renting is you don’t have to worry about that stuff. Well, you do have to worry about it but you don’t have to pay for it.”

Another thing that concerns Cecil with buying a home for a student is the risk of where capital value will be in three years time.

“Buying is not necessarily the best thing because you take this risk of what happens to capital value,” Cecil said. “The problem is, do you know for sure the housing value is going to go up?”

Cecil said that selling a house within three years could be a real push. According to a research done by Zillow, in 2014 the home value index in Muncie, Indiana was $75,200. The renting value index was $807.

However, the way that Sandra has decided to go after her daughters graduate could be a successful outcome.

“They’re going to keep it in case one of us wants to stay there and if neither of us does, my mom will probably rent it out to people instead of selling it,” Shelby said.

Cecil said that this could become a good business opportunity because then the buyer isn’t really getting stuck with a piece of real estate. He said that it makes sense especially if the parents have enough liquidity or have some experience in real estate.   

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1 Comment

  • The Journey of House-Hunting | Ball Bearings Magazine says: February 14, 2016 at 10:55 pm

    […] our new home. We have to evaluate the quality of the landlords we encounter, weigh the benefits of buying a home or renting an apartment, and find people we can tolerate living with. We have to hope that our […]

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