When it comes to real estate investment, the US student housing market is an attractive sector to consider. Deemed stable and recession-proof, it appeals to both new and veteran investors, including those who are more conservative about risk.
However, if you are thinking of investing in the student housing market, it helps to know more about the influential factors that shape it. These are the student housing market analytics and key investment insights you need to make better investment choices.
There are several reasons why student housing is a wise investment choice.
As with any other type of real estate, new student housing projects are subject to trends. These are the key trends to be aware of when choosing a student housing project to invest in.
For more information, read our critical insights into real estate housing trends for student accommodation.
Student housing is always in demand. But what feeds this demand in the student housing industry, and what are the factors that influence it?
The concept of supply and demand, and how they interact with each other, is what helps property developers predict where, when, and what to build in the student housing sector. It also helps investors predict which new student housing projects to invest in.
The demand comes from the growing student population. It is the number of students needing accommodation at any given time. This demand can differ widely from region to region and change year-on-year.
Conversely, supply comes from the existing student housing infrastructure, as well as new housing developments.
The student housing market adapts to meet changing preferences.
The current trend is for purpose-built accommodation, which we’ll have a closer look at in a moment.
But first, let’s discuss growth potential. As the number of higher education enrollments rises and older student housing facilities fall into decline, the demand for this preferred new housing grows. And the potential for lucrative investments in projects that accommodate these preferences grows along with it.
Here are three important insights into the current student housing market.
There are different types of student accommodation on and near American campus communities.
University and college campuses usually offer dormitory-style student accommodation. These are typically separate for the different genders, but a small number of academic institutions now offer co-ed dorms. Student housing also includes shared apartments and houses off-campus.
In the past few years, there has been a greater focus on purpose-built student accommodation (PBSA). This caters to the specific needs of today’s students, with a more holistic experience that supports student living, studying, and socializing.
PBSA offers students a modern alternative to standard dormitory-style housing. These properties include amenities and conveniences like gyms and laundry rooms, and high-speed internet. Some even include smart technology systems and green technologies.
As you’ll learn from our insights and tips for investors and developers, the different student housing types all have advantages. Choosing a mix of different student property types for buy-and-hold investment offers the most stable growth and income streams.
Safe, supportive, and welcoming student housing spaces can make a difference to student well-being and even their academic performance. This has been known for some time, but is a greater area of focus in recent years, with changes in universities’ student housing privacy levels.
It is also possible that the need for certain student housing living conditions differs from one education grade level to the next. For example, first-year students who have never lived outside their parental home may have a more urgent need for social support.
These are particularly important insights to consider when entering the student housing sector as a property developer. Understanding the needs of students at different educational levels and ages can help you make better choices.
One cannot ignore the importance of regional differences, either. Both supply and demand in student housing are influenced by regional differences.
University towns and bustling urban centers with lots of colleges will naturally have a higher demand for student housing. Our research has shown that there is a strong demand for high-quality student housing near flagship universities, and for urban developments with premium amenities.
But before you rush to invest in new student housing projects, check that the local supply and demand are aligned. The demographics are also important, as they may affect the type of student housing local young adults are looking for.
The student housing market remains resilient even during economic downturns. Therefore, many experts would agree that the student housing sector is recession-proof. Even in times of economic instability, student enrollment continues, and therefore student housing tends to remain in demand.
There may be several reasons for this. It has been noted that in a weak job market, more people tend to look to higher education to improve their employability. Another possible reason is that people who could afford tuition fees in the good times can still afford them when the general economy suffers.
However, regardless of the reasons behind the continued demand for student housing amid recessions, the issue of affordability is important.
Top student housing companies and seasoned property investors understand this. Student populations are not all from economically privileged backgrounds. Many come from families struggling to make ends meet. Therefore, the demand for affordable student housing will likely always exist.
In 2023, the US student housing sector attracted 5.7 billion U.S. dollars worth of investments. It would appear to be a wise investment choice. However, student housing investments fare better in some areas than others. So, where does student housing excel?
This is not a question that can be answered once and for all, as the student housing market is a highly dynamic one. The areas in which it excels differ as trends and challenges in real estate, and changes in student expectations, develop.
Always look to the most recent data analytics and student housing market reports before making new investment choices. Our December 2024 snapshot of the National Student Housing Report offers insights into pre-leasing rates and regional rental growth.
What does the future have in store for student housing properties as an investment choice?
It remains a reliable real estate sector in which to invest. Undergraduate enrollment rates have been rising, which keeps demand high. As older dormitory-style student housing falls out of favor and into disrepair, the need for modern purpose-built student accommodations will remain high too.
With the increase in eco-awareness and sustainability felt across all real estate sectors, this will likely play a more important role in the future. Sustainability and smart innovation will give new student housing developments a competitive advantage.
Investors should bear this in mind when selecting new student housing developments to invest in.
The US student housing market offers a wealth of opportunities to property developers and investors alike.
However, it requires a keen understanding of relevant factors. Knowing how to interpret the effects of these factors has implications for potential investments. Therefore, investors need access to accurate data analytics and industry insights to help them navigate these complexities. At College House, you’ll find both.
Whether you need to know the regional student housing market size, the national average student housing rent growth, or the projected PABA supply and demand, we can help. Book a demo, and discover the power of data in action.
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Disclaimer: These images and information attempt to accurately represent floor plans, buildings and amenities. However, the developer, agent, owner and manager reserve the right to make changes to final plans and are not responsible for typographical errors or any differences between photos and actual property. Residents, purchasers and sellers are encouraged to tour the actual property of interest to prevent any miscommunication. Please also note that regional differences will be made to accommodate indigenous plantings, the climate, and the architectural influences of the region.