Venturing to the 'dark side'

By Liz Weeker

Rent prices remain high in the university neighborhood, despite a slow-down in Santa Clara city real estate, leaving students scrambling for affordable housing on the east side of campus, known as the "dark side."

"We knew we wanted to live on the 'dark side' because we couldn't afford anything on the other side of campus," said senior Ana Raab, who pays $425 per month and shares her room with one other person.

Students like senior Mark Litchman, who live on the west side of campus, can end up paying hundreds more per month than those living in similar homes east of campus.

Like Raab, Litchman also shares his room with one other student, but pays $600 per month to live on Bellomy Street.

Prices on the west side have remained high, even though home sales have slowed, according to economics professor Fred Foldvary.

But Foldvary, who studies real estate cycles, also explained that these prices could dip in the next few years in the case of a major recession. He predicts the next cycle could start next year, making houses more affordable.

"They've reached a plateau," he said of house prices. "In fact, in most of California, they've leveled out, and where they've been going up like Santa Clara, the rate of increase has slowed down."

Foldvary explained that during a recession, housing becomes more affordable, enabling people to buy property, rather than rent it. With fewer potential tenants, rent prices decrease.

But the neighborhood surrounding the university is unique because even during a mild recession, students would still need housing, he said.

"A landlord knows there is a limited amount of housing, and so with a greater demand, the rents have nowhere to go but up," he said.

Students like junior Chase Luckey understand that the rental market around the university is competitive, especially on the west side of campus.

"By the time we started looking, all of the good ones were taken, and the rent was expensive," said Luckey, who tried to find housing on the west side of campus but decided to pursue a lease on the "dark side," where he pays $630 per month. "The rent was cheaper, and a lot of my classes are on the north side of campus."

Rentals may not decrease in a mild recession, but in one that's more severe, Foldvary said, workers would be laid off, making tuition less affordable and reducing the demand for housing near the university.

"Right now, I see the rental market getting stronger and stronger for the landlord," said Ron Ramirez, a broker for Century 21 Reality. "What it's relatively going to mean for the students is higher rent."

"I've heard stories where people are paying $500 a bed for rental value around the university, and I don't even mean bedrooms," Ramirez said. "I see basements getting rented out. I see formal dining rooms that are turned into bedrooms around the university."

But not all students are interested in paying top dollar to share a dining room.

"It was clean and nice and cheap," said senior Martha Whitmore about why she chose an apartment on the "dark side." Whitmore pays $625 per month to live in a single on Harrison Street.

Whitmore found her apartment by searching the Web site Craig's List, a strategy that Ramirez encourages students to use.

The broker said he believes that landlords are charging high rates because they know students are packing into rooms.

"I would say that probably over 50% of the owners know why someone is paying that rent because more people are living there. In other words, they rent out a room for $850 or 900 bucks; they know that one student isn't paying $900. You know that $900 is getting split up amongst two people or three people."

Luckey suspects an increasing number of students are looking to alternative housing locations to avoid the fight for expensive housing on the more popular side of campus.

"I think more people are moving over there (the "dark side") because it's getting so competitive living on the light side," said Luckey.

Contact Liz Weeker at (408) 554-4546 or eweeker@scu.edu.