Get a home inspection. Find an appraiser. Hire a loan officer to get you a decent rate. Make sure the roofing, plumbing, electrical and the kitchen sink are all intact. Sign a stack of documents, and you're a homeowner.
Most college students have their heads in a book, feet on the couch, or have been places where words like refinance, equity, mortgage and escrow aren't heard. These are Monopoly words, right? On the other hand, some students are searching for property and finding partners to create business ventures starting in escrow, creating a mortgage and later gaining equity to refinance.
Peter Tichinin, real estate broker and owner of Prudential Real Estate in Chico, said student buyers make up a large part of his clients. They are called student investors or parent-student investors in the real estate market.
The difference between the two is a parent-student investor gets help from parents financially and a student investor is the only name on the dotted line that says owner. Regardless, students are purchasing houses in the Chico area and getting into the real estate boom in California.
"In general we've seen a dramatic increase since February 2000. In broad terms, it (the market) has been going up close to 25 percent a year in Chico," Tichinin said. "All of California has experienced dramatic increases in value, but Chico has gone up especially."
According to an October article in The Sacramento Bee, California's home prices have been on an "ultra-steep" climb. California's median sale price rose 20 percent in 2002, 18 percent in 2003 and a 22-percent increase is projected for this year's housing prices.
Even with the overall high prices of purchasing a house, buying now with no money down purchases and low interest rates. This keeps the monthly costs low and makes it realistic for more people to buy a house.
Hunter Block, an organizational communication major at Chico State, bought a house with the help of his parents in a neighborhood south of the campus. Block takes up one room and rents another in the two bedroom, one bathroom house with a separate cottage in the back, which he is renovating.
"We were just over throwing away money on rent," Block said. "We decided our dollar was better spent on a house payment."
Tichinin said most student investors live in one room and rent the others to other students while they are attending Chico State. The rent takes care of the mortgage payment, and the cost of living in your own home goes way down.
Block and his parents decided the housing market in Chico made sense. The house is close enough to campus that finding student tenants should not be a problem.
With the market so good and the high percentage increase in the price of houses, the Block family plans on making a substantial return.
But what happens when the market goes down?
Tichinin said no one in the market is willing to talk about interest rates rising and creating downward pressure on prices and the market. But no one really knows what will happen.
"What everybody is anticipating is what's going to happen in the spring when it stops raining, sun comes out and the election is over," Tichinin said. "After the first Gulf War, there was an immediate downward reaction in the market, and after the earthquake in '89, the Bay Area saw an immediate increase in the market."
Unpredictable events can affect the local market directly or indirectly, and the biggest economic trends are interest rate, unemployment rate and inflation rate. These are the big wheels on the calculator and are relatively unpredictable, Tichinin said.
As easy as signing a stack of documents and collecting a little rent sounds, in home ownership, easy is not reality. Purchasing a home is a serious venture. Whether for primary residence or renting to tenants, your property is going to be like a bank account with a good interest rate. Knowing the state of the market and the options available to a student can help lower the overall price of a new home as well as the monthly costs.
Students have always been a portion of homeowners in Chico since the university was founded in 1887. And the market is strong for those qualified to make a housing purchase.
"Over the long run, I would say (the market) is pretty safe, that values will increase," Tichinin said.
It is not just the upper-crust students who are purchasing houses in Chico. The demographics of student buyers are characteristic of the student body at Chico State, Tichinin said. Chico is a destination college where students are coming from the Bay Area and southern California or other places where a house costs twice as much.
"There are a lot of people from out of the area who come here and say, 'Wow! Are you kidding? It's only $300,000.' They think it's a killer deal," Tichinin said.
Regardless of what your plan is after purchasing a home, everyone needs to jump through the same hoops and be educated on the current market, its trends and its projections. Odds are you will be dealing with at least two realtors, a loan agent and an inspector. The moves you make with these people will affect everything, from the price of the property to its monthly cost.
There are Web sites and online calculators that can help you figure out what kind of loan and rates are right for your purchasing power. Cornish & Carey has advice, newsletters and listings at ccarey.com. Tichinin has a Chico Prudential Realty site at chicohomes.com that has listings, calculators, a local newsletter and local links. The Sacramento Bee's online homes section has everything you need to know about buying a house in the greater Sacramento area.
John Brassfield can be reached at:
chico_incident@yahoo.com
Other stories in this series:
Climbing the real estate hierarchy
Good Idea, bad credit: how a bad score can break up your team
Check your credit and check your wallet: get ready to buy a house
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