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Is There Such A Thing As Too Much Student Housing?

Is There Such A Thing As Too Much Student Housing?

Week after week, a new article is published by media outlets claiming there is too much student housing.  When a few high-rise student housing buildings go up in a city, they are often met with community resistance. Most times, there isn’t substantial evidence or quantitative proof to dispute such developments. If a market does actually have too much student housing, investors would not build in that area. Investors do an extensive amount of research, looking at the current supply, demand and future trends, before breaking ground.

 

As of right now, according to Axiometrics (a leading source for student housing market research), there is definitely not an oversupply of student housing nationwide and the market is healthy overall. Axiometrics has repeatedly demonstrated evidence that there is not an oversupply of student housing.

Here’s a look at two examples of cities which have been named as having too much student housing at one point.
 

  1. Waterloo, Ontario – University of Waterloo & Wilfrid Laurier University

    This is likely one of the best known cases in Canada, as Waterloo has been dubbed the student housing capital of Canada. Dozens of articles came out between 2014 and 2015 citing an oversupply of student housing and forthcoming problems for landlords and the city. One article claimed there were already 32,000 student housing units in the city, with 7,000 more planned; but only 31,000 students seeking housing. These numbers would make it look like a problem, but as Peter Taylor from Maclean’s said, “Repeat after me: this is not a problem.” Taylor goes on to explain that building more student housing is a non-issue that has been blown out of proportion. As Taylor puts it, “The private sector housing market, rather than any bureaucrat, is always better situated to decided where and how much to build.” What he is saying is that if there truly was too much housing, developers would stop building.

     
  2. Corvallis, Oregon – Oregon State University

    Up until about a year or two ago, Oregon State University was seen as a market direly needing more student housing. As Tom Harrington from Core Campus put it, “OSU is the most underserved student housing market in the country.”  This market has seen a significant increase in student housing developments, but by no means have they oversaturated the market; but that hasn’t stopped critics and neighbors from claiming there is too much student housing.  Neighbors in Corvallis formed a group known as the Northwest Alliance Corvallis, which has protested the development of recent student housing buildings. Despite this resistance, Oregon State & Oregon has seen significantly high student housing deliveries according to Axiometrics, illustrating that the demand is there. Adding to that point, Harrington also stated, “We’re convinced of the demand; you can debate where it should be built, but the need is there.”

 

These are just two examples of many. To list a few others, take a look at ColumbiaHamiltonGreenvilleGuelph, etc. The argument of too much student housing seems to echo nationwide in virtually any city with a reasonably sized university.
 

But what about the times when critics are actually right and there is too much student housing?

 

Well ironically enough, too much student housing is actually a good thing for the vast majority of people in most cases.

 

  • More student housing means more competition. This means landlords and property managers can do one of two things according to James Bow: lower rents or improve quality. Both of these are beneficial to student renters, as the two most prominent problems in student housing are poorly maintained properties and increasingly high rents.
     
  • More student housing often comes in the form of high-rises or purpose-built student housing. In contrast, others are not building single-family home communities specifically for students. This solves another problem often referred to asstudent ghettos in residential family neighborhoods. More students will inevitably move into high-rises and out of family neighborhoods. We previously talked about this in greater detail in reference to NIMBYism associated with student housing.  
     
  • Old student housing (primarily single-family homes) can easily be repurposed into other residential uses. It’s not very difficult to turn a student rental into a family-style dwelling or another type of rental property.

 

In summary, even in cities where there genuinely may be too much student housing development, landlords and property owners of single-unit dwellings shouldn’t be concerned. These cases currently signify that the market is still healthy and the demand for student housing still exists. Again, using Waterloo as an example, apartment vacancy rates actually decreased from 3.6% to 2.9% in early 2015, despite having many new apartment developments being built. Even in such situations, there will always be demand for other types of accommodations than purpose-built student housing, such as single-family homes, in-law suites or room rentals.  While the student housing industry is certainly evolving, the marketplace is fully capable of adjusting according to the change in supply or demand and supporting a healthy rental market for all parties involved. 
 

 
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