Students Ditch Dorms for Apartments Bought by Their Parents

When Graham Patterson begins his first year at Columbia University, he will be moving into a newly renovated Harlem apartment. “I wanted to buy something that would serve the twin purposes that Graham could live in it during his college years, and then I could sell, keep or rent it,” said his father, Dennis Patterson, 59 years old, a Rutgers University law professor. While some college students are decorating dorm rooms, others are moving into new apartments as part of a family investment strategy. Although the phenomenon isn’t a new one, real estate insiders say they are seeing new twists on the trend. It isn’t just foreign buyers snapping up multimillion-dollar apartments in shiny new buildings, but relatively local folks, many of whom already live within commuting distance of New York City. Some of these buyers are former city dwellers who moved to the suburbs to raise their children, and now see a city apartment as a possible retirement location. They say buying early makes financial sense. “It’s definitely a strategy a lot of people are embracing,” said Michele Gradin, a Corcoran agent working with several parents. “It’s taking their money and making it go to work, with their children in mind.” These days, about 75% of parents investing in apartments for their children are domestic buyers, and 25% are foreign, said Stephen Kliegerman, president of Halstead Property Development Marketing. “We used to see it in very concentrated areas, in the pre-’08s, but now we’re seeing it more widely,” including in Harlem and Brooklyn, he said. “As rents climb in Manhattan, and parents are foreseeing an empty-nester situation in the next five to 10 years, they’re saying, ‘Why should I spend all this money on rent for my child, when we should have a second home in the city anyway?’ ” For Anne Conner, a bank president who lives near Williamsburg, Va., the reasons to buy an apartment were twofold. Her 18-year-old daughter, Anne Mills Conner, lived in a New York University dormitory her freshman year, which, her mother said, involved “activities that perhaps aren’t conducive to a healthy lifestyle.” “As I began to look at renting, I compared the cost of renting to investing in my own unit,” said Ms. Conner, who frequently visits New York. While mom and daughter are “like besties,” said their Citi Habitats agent Angel Dominguez, they had slightly different priorities. Daughter: the West Village. Mom: a $500,000 budget. Ms. Dominguez offered advice. “Finding an apartment is kind of like finding a man,” she said. “There always is going to be a trade-off, so make sure it’s a trade-off you can live with.” Mom won, and the younger Anne, an art history major, will move into a $430,000 studio that they are hoping to close on this week. The building, a co-op near Madison Square Park, is a rarity, Ms. Dominguez said, as most co-ops frown on college students living in apartments. Another family, from Hamburg, Germany, pored over hundreds of listings online, eventually falling in love with an East Village co-op near NYU. A couple hundred pages of translated financial statements and many references later, the family turned in its application, only to be rejected by the co-op’s board, said Engel & Voelkers real-estate agent Dolly Hertz. “I basically already furnished the apartment in my head,” said the daughter, Lena Belling, 18, who plans to major in strategic design and management at Parsons School of Design. She ended up in a rental. When it comes to choosing neighborhoods, parents and their children don’t always see eye to eye. While areas of the Upper East Side are considered a good investment, college-age students aren’t wild about the area. “The kids are like, ‘Please do not send me to purgatory,’ ” said Corcoran agent Deborah Heineman. But areas in South and Central Harlem check the necessary boxes for many parents and students. Students like that Harlem has night life and is still “gritty,” Ms. Heineman said, and retirement-minded parents appreciate the neighborhood’s proximity to theaters and museums.

Housing prices in Morningside Heights and Central Harlem increased in value more rapidly than any other New York neighborhood between 2000 and 2014, according to an index developed by NYU’s Furman Center, which studies real estate and urban policies. But not all buyers are waiting until a child has an admissions letter in hand. Ms. Gradin, also of Corcoran, has a client looking for studio apartments for her two children, ages 11 and 13. It is a simple recipe, Ms. Gradin said: “Have a condo, have people live in them, and have them paid off long before her children have to move in.” As for the Pattersons, son Graham, 24, who was recently in the Marine Corps, will chip in on the mortgage for the $726,000 one-bedroom with his veterans housing allowance. But what happens when his dad visits? “He just bought an air mattress,” Graham Patterson said. This article was originally published on The Wall Street Journal.