The American college experience has come a long way in recent years – even the real estate industry is feeling it. In the last decades, college enrollment has skyrocketed as student loan programs proliferate and four-year diplomas become increasingly valued. With this influx of students, many are opting for off-campus housing. However, the days of penny-pinching lifestyles may be a thing of the past for many students at large universities.
New student-only apartment buildings are becoming more and more luxurious. It doesn’t seem to make sense since students are typically on tight budgets. They have a reputation for recklessness and destruction, and given the short school year, the leases are extremely short term. So why are landlords interested in cheap, irresponsible, and temporary tenants?
Because there’s more money on the line. The market is now competing for higher quality rather than lower prices because of a few trends. International and out-of-state attendance has become increasingly popular at large state universities, and many of these students are finding the local housing more affordable than what they’re used to at home. Then there’s the social component. When students see their peers heading for luxury buildings, they often lobby their parents to splurge on comparable amenities. With increasing access to student loans, even the students that are offsetting the costs to their future selves (and taxpayers) end up buying into the trend.
This case study goes against the typical trends in real estate. Location is still a premium, but the students seem to be responding to social competition more than economic utility. Many are critical about the potential for worsening socio-economic disparities, while others are excited for the new options. Regardless of your take, this is definitely a trend to be aware of.