You’re about to get schooled on where to invest—literally. Turns out one of the best places to park your real estate investment dollars is near the halls of higher education. But not in just any college town, however; the best investments are in inland towns.
Why so specific? That’s according to the data experts at Redfin, who have crunched the numbers and seen some startling trends.
Yingqi Xu, Redfin’s senior economist, said in the Redfin press release:
“Many of the college towns with home prices rising the fastest are also among the most affordable places to buy a home right now. That combination is attracting buyers who have been priced out of larger metros, while universities continue to provide a reliable foundation of demand. Meanwhile, many of the most expensive college towns are experiencing price declines as high mortgage rates and elevated home prices make buyers there more cautious.”
College towns bucking national trends include Morgantown, West Virginia, home of West Virginia University; Syracuse, New York, where you’ll find Syracuse University; and Tuscaloosa, Alabama, where the University of Alabama is, all of which are anchored by large universities and have enjoyed double-digit home price increases, according to a Redfin analysis of MLS data from the three months ending May 26.
The criteria analysis was as follows:
- A U.S.-based college town with a minimum student population of 10%.
- Students must be enrolled in a four-year, accredited university.
- It must be at least 30 miles away from a metro with a population of over 1 million.
Other college towns that made it to the top of the list include State College, Pennsylvania (Pennsylvania State University), where homes went under contract in just five days, compared with 49 days nationwide. The double-digit home price increases (State College saw a 10.6% year-over-year gain to $459,050 in May) mean that in many places, affordability is getting squeezed.
Why College Towns Are So Appealing
Part of the appeal for towns hosting major colleges is the high rate of enrollment. According to a March 2026 student housing market update from real estate consulting firm Capright, total U.S. college enrollment reached 19.4 million students in fall 2025, a 1% year-over-year increase and the highest level since 2018.
Consistent enrollment translates into ongoing demand for housing, with 52.3% of student beds across Capright’s tracked campuses already leased for the 2026-2027 academic year, up from 45.6% from the previous year. This doesn’t include the off-campus accommodation often preferred by non-freshman students and those studying postgraduate degrees, as well as the many staff employed by the universities and numerous tertiary businesses based around the campuses, such as retail and medical centers.
This was reinforced by real estate software management company RealPage, which tracks student housing nationally. It found that properties more than a mile from campus had 39.3% of beds pre-leased by January.
“Things are really looking up for some of the largest universities in the country, especially in the South,” Capright director Jonathan Rivera said in a March student housing update. “You’re seeing a lot of population growth, which has helped to grow a lot of universities. Student housing is a subset of housing generally, and it will continue to be in high demand while the amount of housing continues to be constrained.”
Parallels With the National Housing Market
The most affordable college towns in the country share a parallel with the national housing market, where the best deals are to be found in the Midwest and South.
According to Redfin’s July 2026 report, Dayton, Ohio (Wright State University and the University of Dayton); Syracuse, New York; and Mount Pleasant, Michigan (Central Michigan University), all have median house prices under $185,000, although only Syracuse has enjoyed 12.5% home sale growth, while the others have seen declines.
Part of Syracuse’s growth may be due to technological and manufacturing investment. Micron, a designer and manufacturer of computer memory and data storage chips, has agreed to invest $250 billion in the area through 2035. This is largely fueled by the rising demand for memory in the AI era, the company says.
Policy Shifts and the Opening for Small Landlords
The recent government policy shift to bar corporate investors that own over 350 single-family houses from buying homes has been criticized in some quarters for not moving the needle enough on single-family housing, as small investors already own the majority. However, student housing is where the policy could have an effect.
For smaller buyers, the practical effect means that deep-pocketed institutions will be constrained from snapping up single-family homes in tenant-heavy college towns for buying and holding. Though they will still be allowed to buy, fix up, and sell, this leaves a gaping opportunity in many markets.
The Strategy for Mom-and-Pop Investors in Inland College Markets
Redfin’s college-town study is a good place to start looking for future investments. Pinpointing affordable markets with high price growth and planned development (such as Syracuse), along with studying stats from RealPage and Capright, allows landlords to gauge occupancy over the next year. This enables a fairly accurate projection of cash flow targets.
Capright estimates that national student housing cap rates currently sit in the 5.5% to 6.5% range, roughly 25 to 50 basis points higher than conventional multifamily, which translates into better yields for small investors comfortable with managing yearly turnover and leasing cycles attuned to the academic year.
Part of the appeal for single-family student housing is the ability for small landlords to rent by the room, thus boosting cash flow beyond usual single-tenant occupancy. It requires specialized leases, parental guarantees, and careful property management to ensure all tenants pay their way and those who don’t can be replaced or have their feet held to the fire by contacting their parents or evicting.
Don’t Conflate High Demand with a Good Investment
One thing many student housing reports fail to mention is that a university’s enrollment is often tied to its academic success, so investors need to look at academic trends, outside corporate investment (for example, Alphabet and Nvidia are investors in Carnegie Mellon’s computer science program) or collaboration with major companies, as well as stats on grads who find high-paying jobs.
However, be careful about conflating high-performing, high-demand universities with being good investments. A city like Boston, for example, has numerous noted universities, and housing is always in demand. However, the city’s real estate prices make these places bad cash flow buys if you are leveraging.
Final Thoughts
For savvy landlords who can offer a well-furnished, curated student experience akin to a quality Airbnb, provided they screen meticulously, there may be an opportunity to capitalize on the malaise facing conventional crowded student accommodation.
The recent third annual State of the Student Housing Industry Report by StarRez, an on- and off-campus student housing software solutions company, highlighted housing-related stress and tenant conflicts affecting mental health as major concerns in standard student accommodation. Jason Day, CEO of StarRez, said in a press release:
“Today, student housing teams are being asked to do more than ever: manage buildings at higher occupancy, support increasingly complex student needs, and make smarter financial and operational decisions, often with limited resources. What this year’s research makes clear is that the path forward is not simply about adding more capacity. It is about giving housing teams better visibility, more connected data, and the right technology to operate more proactively, reduce administrative burden, and create a stronger residential experience for every student.”
For landlords who can offer a “home away from home” living experience for responsible groups of student friends, they might be able to rent to students who want to guarantee a soft landing for their academic year—and might be willing to pay slightly more for the privilege.
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