Photo illustration by Justin Morrison/Inside Higher Ed | Getty Images
It’s no secret that housing costs across the United States are high—for students as well as for the general population. But from November 2022 to May of this year, the average rental cost for purpose-built student housing grew faster than rent prices for regular multifamily housing for the first time. As a result, some students are being priced out of apartments that were designed specifically for them.
According to data released by RealPage, a real estate software company, student housing rental increases outpaced multifamily rental increases during that seven-month period. While student housing rents were 8.8 percent higher, on average, year over year, multifamily rents were up only 4.5 percent.
The trend seems to coincide with students returning to in-person classes after the COVID-19–related closures of 2020 and 2021. After stagnating during the pandemic, year-over-year rental increases for student housing first began to grow again in early 2021, as did rental increases for multifamily housing. But the latter increased rapidly at first and are now slowing significantly, while student housing rents continue to climb.
The data provide at least a partial explanation for the chaotic student housing landscape leading into the fall 2023 semester, in which some institutions are still struggling to find accommodations for their students just weeks before classes start. Some are asking students to live in nearby hotels or on nearby college campuses, while others are jumping to extreme measures; Middlebury College, for instance, has offered to pay students to take a semester off in hopes that housing demand will ease by spring.
Carl Whitaker, an economist with RealPage, said rental trends for student housing are essentially mimicking trends that conventional multifamily real estate went through months ago, and he expects the disparity between the two markets to even out by 2025 at the latest.
“What’s happening in student [housing] is basically the delayed trend that you’re seeing in conventional,” he said.
Still, the burst of growth is unusual for student housing, which has long been considered a slow and steady niche sector. According to Whitaker, in each year from 2010 to 2020, purpose-built student housing rents only grew by about two percent.
Peter Blutreich, who facilitates partnerships at Rent College Pads, a platform dedicated to helping students find off-campus housing, cited a few factors that may have contributed to high rental prices for student housing. Closures and the high price of materials slowed construction of both off-campus and on-campus housing during the pandemic, so when students flooded back to campus in 2021 and 2022, their options were limited. Additionally, some colleges have admitted larger freshman classes than they did before the pandemic, forcing more students to live off campus.
“It was a perfect storm coming out of COVID for the institutional settings and institutional markets,” he said.
Moving Out of Student Housing
Even if Whitaker is right and student housing rental increases slow down in the coming years, the ongoing surge is impacting students attending college now.
Nick Madincea, the incoming student government president at Baylor University in Waco, Texas, lived for two years in an apartment complex within a block of the university. Then the building jacked up the rent by a whopping 50 percent; his portion—he lived with three roommates—jumped from $614 to $914 a month.
Instead of renewing his lease, Madincea decided to relocate to an apartment complex two miles from campus.
“I come from a single-parent household. I would not be at Baylor if it weren’t for a full-ride scholarship I’m on, and I have to pay rent myself each month,” he said.
Jeremy Vickers, an associate vice president in the Office of External Affairs at Baylor, said that over the past decade or so, a number of national student housing companies have moved into town and built housing near campus with rents higher than most in the area. They hinge their hopes on the idea that students will be willing to pay a premium for the location and the amenities that these apartments typically offer, including recreation facilities, study areas and even free coffee.
“Students do tend to prefer to be near the campus for practical reasons but also for the sense of community. When you’re surrounded by college students and every morning you’re walking together or biking together to campus or at night eating dinner together, that creates a sense of collegiality,” Vickers said.
According to RealPage, the greater Waco area has seen one of the country’s greatest changes in student housing rental rates, which skyrocketed an average of 17.2 percent from May 2022 to May 2023. Vickers noted that the spike stems in part from what’s known locally as the “Magnolia Effect,” in which the extreme popularity of HGTV power couple Chip and Joanna Gaines—whose design firm, Magnolia Homes, is based in Waco, where they also shot their show, Fixer Upper,—has drawn high numbers of new residents to the city.
Whitaker said he doesn’t think the trend will contribute significantly to how students choose their housing.
Still, Madincea said he’s seen a change in his fellow students’ attitudes toward living off-campus, with some opting to rent out large houses with groups of friends to save money rather than try to stay in a luxury apartment building.
Rent College Pads, which partners with Baylor, is also looking for ways to capitalize on students who don’t want to live in purpose-built housing. The company, Blutreich said, works to connect with mom-and-pop landlords in a given community and lists them on the site so students know their full range of housing choices.
“Students have always sought the best deal,” he said. These days, they may just have to look a little further from campus to find it.