Students bring down property values

Megan Esau

The expansion of off-campus student housing surrounding UW Oshkosh, caused by a rapid increase the in population of student renters, may have a negative economic impact on the city, according to city planning director Darryn Burich. Junior and senior enrollment numbers at UWO, a population that largely lives in off-campus rentals, has increased from 3,900 students during the 2000 – 01 academic school year to 5,623 students during the current academic year, according to UW System undergraduate enrollment statistics. Over that time period, property management companies have acquired more properties in the neighborhoods surrounding campus to meet this expanding student housing demand, according to city of Oshkosh housing ownership records. This has caused the transition of those neighborhoods into predominantly poorly taken care of student rentals. A memo presented to the city manager on March 24 defined two categories of concern with the rental housing stock: the first being safety and appearance of rental properties and the second relating to property values and tranquility of life in single-family neighborhoods. “When the rental starts encroaching into a predominantly owner-occupied neighborhood, over time it pulls down the value of the housing stock,” Burich said. “That can establish a new comparable value in the neighborhood lower than where it was before.” Wisconsin Statute 70.32 states the value of a property should be assessed at a fair-market value, or what a reasonable buyer would pay for a property in its present condition. The need for off-campus student housing impacts the value of properties surrounding campus in a number of ways. The amount of money a property recently sold for has an effect, said city of Oshkosh appraisal commercial supervisor Marty Kuehn. According to the rental housing memo sent to the Oshkosh city manager, the transition of neighborhoods from single-family homes to rental properties tends to lower property values. “There is a ceiling for how high landlords will acquire properties for and that is oftentimes below assessed value so that helps to create a new, lower comparable value in the market,” the memo stated. Even though property managers said they understand the guidelines for how assessments are made, some landlords do not believe those numbers are actually representative of the value of a building. “That doesn’t mean what we paid, it doesn’t mean how much money was invested, it means that’s their view of what the property is worth for property tax purposes,” Mike Goudreau, one of the owners of Discovery Properties said. “So it’s the government’s attempt to try and collect more money from us.” Kuehn said he disagrees with that statement and said an assessor’s guise is not to approach a property with the mindset of pushing as much money as possible in order to get money out of people’s pockets. “That’s a jaded outlook on life,” Kuehn said. “The assessments on properties are used to collect property tax from that property and the other properties. That’s to supply income to the community to provide those services to the city, to the county, to the state, vocational, school district.” Regardless of decreasing property values, the cost of rent for students continues to rise each year by about $10 per tenant, according to All American Investments rental agent Brian Gauthier. Even with this increase in rent, the quality of off-campus student housing generally stays the same, and Discovery Properties said it is not always worth it to keep properties in great condition due to the possible damage renters may create. “I’m sure you can imagine it’s hard when you have that many properties to keep them all 100 percent looking nice,” Discovery Properties customer service representative Meghan Smith said. “And it’s hard too when you’re placing seven guys in a house. If we rehab an entire unit and put eight guys in there for a year we’re not going to get the same property we put into it out of it.” Tony Palmeri, a former city council member and member of the Middle Village Neighborhood Association, which focuses on neighborhood activism in the area bordered by Jackson, Church, Main and Irving, said this argument can only be used to an extent. “I’m sympathetic to landlords saying they don’t want to fix things because people will just break them, but think about what a cop out that is,” Palmeri said. Poor rental housing quality not only impacts students but also brings down the value of properties still owned by single families. This makes single-family homes in neighborhoods surrounding campus less attractive to good buyers and makes houses harder to sell. “It is already difficult enough to sell a home, but when you are surrounded by properties that are not well kept, it doesn’t become impossible to sell your home, but the pressure to give it away for less than what you think it is worth is greater,” Palmeri said. He said people who could be key elements to creating a better neighborhood engage in panic selling and flee the areas surrounding campus because they think the housing and economic situation will never improve. “Basically, any community thrives when the people that live in the community believe the community is worth caring about,” Palmeri said. “Rental properties that are not kept up, whether they are student rentals or any other, give the impression that this is not a place worth caring about, this is a place where people just live for a few years and then they move on, and that is destructive to community morale.”