Want to learn about the state of the student housing market in 2023?
That’s what you’ll learn today. I’ll talk about:
- The student housing market size
- Student housing and recession
- Student housing trends
- And much more!
Want to learn more? Read on.
You’ll learn:
What is the student housing market?
Student housing trends, preferences, and needs
What is the student housing market?
Student housing refers to accommodation for people taking higher education courses.
Students can choose between on-campus and off-campus housing.
However, only 22% of college students live in on-campus housing.
At the same time, there is growing demand for off-campus housing.
And that’s what we’ll look at next.
What is the student housing market size in 2023?
The student housing market size is worth over $10 billion in the U.S.
And the industry is continuously growing:
- More college enrollments: College enrollment is expected to hit 377.4 million worldwide by 2030. Compare that to just 99.9 million in 2000. That’s a 27% increase.
- Increase in international students: According to the OECD, 5 million students traveled internationally in 2019. That number is expected to rise to 8 million in 2025.
- Higher percentage of non-traditional students: The NCES says that graduate enrollment is growing. Predictions say rates are expected to reach 3.4 million graduate students in the US per year by 2031.
What’s more, on-campus housing is getting more expensive – the cost of renting a dorm room on campus has gone up by 7% in 2023 alone.
And 8.6 million students struggled to find student housing in 2023.
In other words, there is far more demand than supply in this market.
Now, you might be wondering how sustainable the market is.
Read on to find out.
What is the future of student housing?
The future of student housing offers plenty of opportunities for newbie investors.
But that’s if you know how to cater to what students want from their housing.
As of right now, the current student housing market is not meeting demand.
Students need comfortable, affordable accommodation that’s close to campus and convenient for their lifestyle (we’ll talk more about the specifics later on).
And current on-campus options are falling short.
Why? Often, policymakers are prioritizing other areas.
This leaves private investors the opportunity to plug the gap in the market.
However, how could the student housing market be affected by a recession?
Let’s talk about it.
Student housing and recession
Housing took a huge hit during the 2008 recession.
But even though commercial real-estate investing has historically struggled during recessions, student housing is different.
The Wall Street Journal called housing geared to college students at popular schools “a rare bright spot in the beleaguered commercial real-estate business.”
And the numbers back that up.
College enrollment grew by 16% between 2007 and 2010. This is because more people wanted professional qualifications to compete in the job market during the 2008 recession.
That trend will likely continue if we go into recession again.
In fact, the student housing market is predicted to reach over $14 billion in value by 2027.
However, what type of housing are students looking for? Let’s take a look.
Student housing trends, preferences, and needs
What type of accommodation is in demand in the student housing sector? Here are five things students value:
Students want community
Experts claim that community-centered student housing is trending upward in 2023.
This could be because Gen Z is reportedly the loneliest generation. 73% of Gen Z say they feel lonely sometimes or all of the time.
As Gen Zs are the first generation to grow up with the internet, they are seeking more offline opportunities to meet people.
In fact, a study by Stanford University showed that Gen Z prefer meeting in person even though they are the most “online” age group.
Studies also show that Gen Z care more about their studies than generations before.
What does this mean for you as a student housing investor?
Well, communal study areas are important in student housing so that tenants can feel more connected to their roommates.
Fast Wi-Fi is the most important amenity
Speaking of the “online” generation – studies show that the most in-demand amenity for students is strong Wi-Fi.
Many college classes are still delivered remotely since the pandemic. More lectures are recorded too, so college students need fast internet to access their program resources.
Beyond studying, Gen Z are more likely to be frequent users of social media and apps during their leisure time.
55% say they use social media a lot and 56% use wellness apps to de-stress.
Co-ed housing options are on the rise
As for living arrangements, the younger generation is far less concerned about gender split than the generations before them. In fact, gender identity in general is less important for Gen Zs.
Today, over 270 campuses across America offer co-ed housing to students.
You can advertise your properties as co-ed which brings you more opportunities for picking quality tenants.
Privacy is a priority for new student housing properties
Even though students like having communal areas to socialize and connect, they still strongly prefer to rent private rooms.
And this makes sense. Most students across the board don’t want to share a small dorm with a stranger, even if it’s more affordable.
That’s why 63% of student housing is made up of private rooms instead of shared dorms.
But, on-campus housing is more likely to have dorm arrangements than private rooms. So there’s a rising demand for affordable, private housing off-campus.
Speaking of affordability…
Affordability outweighs sustainability
Gen Z has been labeled the eco-generation. Let’s look at the numbers.
83% of Gen Zs report that they are concerned about the environment. And 87% of students surveyed by the Global Student Living Index say that student housing should be getting more sustainable.
However, they are not willing to pay more for spaces that are more eco-friendly.
So even though sustainability is a priority, affordability is the most important factor for students looking for housing.
In fact, the cost of living was the #1 ranked concern by Gen Z and millennials surveyed in a study in 2022.
What does this mean for you?
Sustainable amenities – like energy efficiency, recycling, and reusable utensils – will likely make your property more attractive to new students.
But prioritize affordability if you want your property to be in high demand.
Students want convenience and practical amenities
Students want convenience from their housing.
And you can see why.
44% of Americans have a side hustle, and students are no exception.
Between socializing, studying, and working, they are always on the go.
So having housing close to campus and other conveniences like grocery stores and takeout places make student properties more attractive.
Providing parking and smart technology options are also bonuses students look for.
Consider:
- Smart security systems: Systems with cards or fobs increase the security of your property while increasing convenience for your tenants.
- Intercoms: Video and audio intercoms help tenants monitor who comes in and out of the property.
- Smart lighting: Simple smart lighting systems provide more comfort to students as they can adjust the lighting from their phones.
Next steps
Now you know what the student housing market looks like in 2023.
But understanding the market is just the beginning. If you’re interested in starting a student housing investment business, you’ll need to learn how to invest.
I built a multiple six-figure student housing investment portfolio. My mission is to coach others to a life of financial freedom by becoming investors too.
By following my process, you can skip the newbie mistakes and use techniques that get results.
If you’re ready to start your real estate investment business from scratch, contact me for one-to-one coaching.
Read more:
Student Housing Investment Returns: The Ultimate Guide
