Is there a student housing bubble and is it about to burst?


Source: leadingedgefabrication.net

Source: leadingedgefabrication.net

For many collegiate cities and towns across the United States, the steady influx of international students (and often with their families), from primarily China/Asia, have lifted the local real estate markets out of the post-2008 doldrums. The concern now becomes whether these same housing markets are becoming over-saturated with student-oriented housing developments, leaving them vulnerable to a bursting bubble if the number of students arriving from overseas plateaus or declines.

The boom in new students from China/Asia in the past decade has been beneficial, particularly for slower growing collegiate communities, but sooner or later the growth trend becomes unsustainable. This could result from the current economic crisis in China’s financial markets, improved or increased higher education opportunities at home, a diminishing pool of potential students, or some other reason.

Countless student housing projects of various sizes and shapes have been proposed and/or built-in collegiate communities across the country. If this trend continues unabated, the risk for communities, particularly slower growing ones in the East and Midwest, rises. They are at a greater risk because their non-student populations are not growing from migration and natural increase to the extent that communities are in the Sunbelt and West. Without the annual arrival of of more international students, it will be difficult to otherwise fill the supply of vacant units.

What may be a mini-boom today for some collegiate communities, could quickly become an overwhelming glut of un-leased apartment units, vacant or slow-selling homes, or canceled projects. Canceled projects are one thing, but when units sit empty or developments are incomplete, a community’s image can quickly become tarnished, making it even harder to foster future economic growth.

While the influx of international students has undeniably brought a welcome and needed increase in cultural diversity to many collegiate communities, overbuilding in anticipation of unsustainable growth rates is a recipe for a disastrous real estate fallout after the bubble inevitably bursts. At some point good planning principles, such as requiring market studies that demonstrate the necessary market demand for each new project, and reason need to prevail over volatile market forces that only seem to benefit a few, while posing the potential for leaving local real estate markets in ruin.

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This entry was posted in Asia, China, cities, colleges, culture, demographics, diversity, economic development, education, geography, globalization, Housing, humanity, immigration, land use, marketing, new urbanism, placemaking, planning, Statistics, urban planning, zoning and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

4 Responses to Is there a student housing bubble and is it about to burst?

  1. Residential development is one area where I think it’s really important to “move toward the center” to win in the long run. In housing, what I mean by “the center” is a combination of a population pyramid which can be expected to achieve ZPG (zero population growth), and a price distribution which is affordable to all the people who need housing. This now has to include rental units. We also see some buildings in the oil patch in North Dakota which are intended first for oil field workers, but which can be repurposed for travelers when the oil supply diminishes and fewer workers are needed.

    Like

  2. problogic says:

    Thank you, Jean.

    Like

  3. Glory Meyer says:

    “Is “their” ….!!!!! should be there.

    Like

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