Back to School: University Towns Are the Newest Frontier in Luxury Housing

Key Takeaways 

• Million-dollar home sales have tripled in several university towns in the last 5 years.

• Healthcare, tech and the university economy fuel high-paying jobs that attract everyone, from Millennials to those nearing retirement.

• Affluent buyers with no prior connection to the university are nonetheless drawn to college towns by lifestyle factors and a lower cost of living.

“Seven years of college down the drain,” lamented John “Bluto” Blutarsky in the 1978 comedy classic “Animal House.” The prospect that the endless fun of college might actually be coming to an end was a sobering thought for the patron saint of frat parties. Miraculously, Bluto, played by John Belushi, somehow became a U.S. Senator. And if he were around today, it wouldn’t be hard to imagine him enjoying a luxurious retirement in the shadow of the fictional Faber College.  

He’d have plenty of company.  

University towns are trending upscale, growing in popularity with affluent homebuyers, who increasingly are attracted to small towns with big-city amenities. College towns fit the profile perfectly with their cultural offerings like theater, museums and live music, university-supported healthcare systems, and big-time sports. More and more, these towns are also demonstrating a thriving ecosystem of startups and large corporations, along with public elementary and secondary schools that meet the high educational standards of university professors and their families.  

“Is this a trend? Absolutely,” says Holly Purcell, managing broker and founding partner of Ansley Real Estate Christie’s International in Athens, Georgia, home to the University of Georgia. “In Athens, people want to come back to their college town. They’re leaving big cities because they can work from home or they’ve retired, and the cost of living is lower here.”  

Lower, but rising.  

In Ann Arbor, where life revolves around the University of Michigan, average home values have increased 47% since 2018, notes Eric Walstrom, broker and co-owner of @properties Christie’s International Real Estate, which recently announced it is expanding from the Detroit Metro area to the college town of 124,000.  

But even more impressive is what is happening in Ann Arbor’s high-end market. In the rolling 12-month period ended June 2023, 141 homes sold at $1 million or more, three times the average over the previous three years. 

It’s a similar situation in Madison, Wisconsin. Million-dollar home sales around the University of Wisconsin jumped from 51 units in 2019 to 105 in 2021 to 144 the following year. Last year, 7-figure transactions ticked up by only one unit, but the leveling off is not a demand issue.  

“There are way more people who want houses in Madison than there are houses,” says Melissa LeGrand, owner of @properties elleven Christie’s International Real Estate. Her average transaction is now $1 million. By comparison, the average home price in the state of Wisconsin is $287,000. 

In Fayette County, Kentucky, home to the University of Kentucky in Lexington, sales for homes of $750,000 and up have also tripled since 2018, and Rusty Underwood, owner and CEO of Christie’s International Real Estate Bluegrass, notes that “We are seeing a large influx of out-of-state buyers entering the area.”

Out west, a number of factors are driving the luxury market in Montana’s two principal university towns, Bozeman and Missoula.

“Areas around both universities have seen big increases in prices and demand,” says Ryon Brewer, president of PureWest Christie’s International Real Estate. “In Missoula, the luxury profile has grown specifically because of the University of Montana – the culture, arts, and strong sports scene – and secondarily because of the tech sector.”

Montana State in Bozeman plays an even bigger role in the state’s booming tech industry. The school is leading one of 32 new regional tech hubs designated by the federal government. Oracle, Snowflake and other large software, robotics and photonics firms also work with the university. Along with Bozeman’s proximity to Yellowstone National Park and the Big Sky Resort, this attracts a steady stream of wealthy homebuyers.

“Bozeman is a price and luxury leader in Montana for non-resort properties. This will continue and indeed grow,” Brewer says.

Underscoring the appeal of university towns among luxury homebuyers is the fact that many of these buyers have no previous connection to either the town or the local university. Ansley broker Gena Knox told Mansion Global in a May 2022 interview: “They’ll just read an article and say, ‘Oh, we heard it’s a great place to live and a good place to raise our family.’”

While the #1 inflow city to Madison is Chicago (located just 90 minutes away and home to many UW alumni), San Francisco and Seattle are in the top 5, and Denver, San Diego and Spokane round out the top 10.

“It’s about quality of life,” says LeGrand. “The walkability, the short commute times even if you live or work two towns over. There are people here from all over the world, so there’s diversity of culture, diversity of cuisine. And people enjoy the seasons.”

In other words, college towns are interesting, if not downright entertaining, most of the time, and people want that, especially as they near or enter retirement.

“The young, energetic feeling of university towns is really appealing to the 50- to 75-year-old crowd,” notes Joe Taggert, president of LandVest Christie’s International Real Estate, which has a large presence in Boston, Burlington, Vt. (University of Vermont), and the Berkshires, the latter being home to several of America’s top liberal arts colleges.

Finally, many college towns are geographically blessed, having been established 100 or even 200 years ago, when prime acreage was plentiful and cheap. The University of Wisconsin is located between two lakes ringed by multi-million-dollar homes. The University of Vermont is on the shores of Lake Champlain. The University of Colorado is adjacent to the Front Range of the Rockies.

“In a lot of college towns, land for homes is constrained by the college itself as well as some other geographic feature – a mountain or body of water. It makes building new homes incredibly challenging, so prices continue to rise,” explains Brewer.

Even if college towns aren’t directly adjacent to these amenities, they’re often nearby. “From Athens, you’re a short drive from lakes and mountains. You’re a few hours from the Atlantic coast. And you don’t have to fight Atlanta traffic to get there,” says Purcell.

For more trends and insights, read the 2024 Global Luxury Real Estate Forecast here.