With each passing academic calendar year, more and more student housing is being made available for colleges and universities across North America.

There has been a great deal of speculation within the multifamily housing industry on whether or not there is an oversupply of student housing hitting the market. Some industry insiders have proclaimed that the student housing market is becoming oversaturated, especially within the United States. Others believe this is a myth. Let’s examine some facts.

Beginning in the late 2000’s, REIT’s and private-equity firms began adding a great deal of purpose-built student housing to their portfolios, as they saw great investment potential. The Wall Street Journal claimed that some developers overestimated future enrollment rates and didn’t consider other student housing developments, which led to an oversupply in some markets. This is perhaps what sparked the discussion about national oversupply in student housing.

However, this oversupply was only occurring in a select few markets within the United States. It’s imprecise to attribute a national trend of oversupply, based on only a handful of markets. While it may hold true that certain popular college towns are in a state of oversupply, there isn’t enough quantitative data to demonstrate oversupply on a national basis.

AxioMetrics estimated that in 2014, a total of 60,000+ beds, both on and off-campus, would be delivered nation-wide for the fall. This has created concern. However, it should be noted that while student housing deliveries are increasing, they are being spread across more universities and states than in the past (see the AxioMetrics Inc. graph here).  Furthermore, the increase in student housing deliveries has constantly been increasing each passing year (see here). Lastly, this trend is likely to continue to coincide with increasing enrolment rates.

When evaluating oversupply in student housing, it’s also important to look at the availability and development of on-campus housing. According to the Department of Education, between 2009 and 2013 enrollment increased from 606,000 to 13.3 million within the United States, a fairly substantial increase. Meanwhile, on-campus housing has been lagging in comparison to enrollment rates. From 2009 to 2013, on-campus beds increased from 151,000 to 3 million. This would illustrate that enrollment is far out-pacing on-campus housing development, which has created the need for more off-campus housing. 

The Department of Education estimates that by 2021, there will be over 24 million full-time and part-time students enrolled in colleges and universities in the United States. It’s evident that enrollment is going to continually increase. Unless on-campus housing dramatically increases, it’s very likely that off-campus student housing development will continue to boom, in order to meet this demand. 

While some markets may be approaching the point of oversupply, it does not appear to be a nation-wide trend at this time. It’s also important to remember that the purpose-built student housing sector is still relatively immature. AxioMetrics dates this sector as starting around 1995, but it really didn’t gain substantial momentum until the late 2000’s.