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State College, PA: Rising Home Values and Ownership in a University Town
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
State College, located in Pennsylvania, is a vibrant community known for being home to Penn State University's main campus. This college town has experienced significant changes in its housing market and demographics over the past decade, with notable shifts in homeownership rates and property values. The homeownership rate in State College has shown a gradual increase from 20% in 2013 to 26% in 2022. This upward trend in homeownership coincides with a substantial rise in average home prices. In 2013, the average home price was $224,147, which steadily climbed to $363,255 by 2022, representing a 62% increase over nine years. This correlation suggests that despite rising home prices, more residents have been able to enter the housing market as owners.
Federal interest rates have played a significant role in shaping homeownership trends in State College. The period from 2013 to 2016 saw historically low interest rates, hovering around 0.1% to 0.4%. During this time, homeownership rates increased from 20% to 22%, likely due to more favorable borrowing conditions. As interest rates began to rise more sharply from 2017 onwards, reaching 1.68% in 2022, homeownership continued to grow, reaching 26% that year. This suggests that other factors, such as local economic conditions or housing policies, may have also influenced the homeownership trend in State College.
The rental market in State College has experienced its own set of changes. The percentage of renters decreased from 79% in 2013 to 74% in 2022. Despite this decline, average rent prices have shown overall growth, albeit with some fluctuations. In 2013, the average rent was $1,198, which increased to $1,268 by 2021 before slightly decreasing to $1,189 in 2022. The rental market's resilience, even with a declining renter population, may be attributed to the consistent demand from the student population associated with Penn State University.
In 2023 and 2024, State College's housing market continued its upward trajectory. The average home price reached $382,071 in 2023 and further increased to $389,923 in 2024, representing a 7.3% growth over two years. This growth occurred despite a significant rise in federal interest rates, which stood at 5.02% in 2023 and 5.33% in 2024, the highest levels seen since 2007.
Looking ahead, predictive models suggest that both average home prices and rent prices in State College are likely to continue their upward trend over the next five years. Home prices are projected to increase by approximately 3-5% annually, potentially reaching around $450,000 by 2029. Rent prices are expected to grow more modestly, at about 2-3% per year, potentially reaching an average of $1,300-$1,350 by 2029.
In summary, State College has experienced a notable increase in homeownership rates despite rising home prices, suggesting a robust local economy and potentially favorable local policies for homebuyers. The rental market, while showing a slight decline in the percentage of renters, has maintained relatively stable average rents, likely supported by the constant influx of students. The continuation of rising home prices, even in the face of higher interest rates, indicates strong demand and limited supply in the local housing market. These trends point to a dynamic and evolving housing landscape in State College, with potential implications for affordability and housing availability in the coming years.
