Student Housing Market Crash

[Micah Kohls]

Higher Education has historically benefited from geographical advantages. -- A high % of enrollment is based on student access to campus locations. Colleges will now utilize virtual technology for teaching students. Universities will compete on content to capture market share. 

My theory: Colleges that can attract students based on campus social life; such as athletic programs, fraternities, ivy league traditions, etc will likely sustain. However, for the lower tier colleges that were able to gain market share due to accessibility but don't have the (above) attractions will face enrollment problems going forward. 

Why? Because the best colleges will be more accessible online (virtually). They will take market share from lower tier colleges. They will likely make their degrees more cost efficient to students because of the virtual efficiencies. 

Let me put it this way, if let's say Princeton changed their revenue model to adapt to a remote online platform they would lower their tuition fees and in exchange broaden their student base to offer online education degrees. Thus if tuition pricing was similar, would you rather get an online degree from Princeton or attend your local university (for example Eastern Illinois) with no social scene for a lesser degree.  

[Account Closed]

I see universities fighting tooth and nail to keep their brick and mortar teaching models.  For one, because they basically aren't having to pay any property taxes on the real estate they own, typically - but - that's because they are usually the hub of the economy for their town.  So, take away the students that are the source of the economy for a town, and why then should that university then not have to pay any property taxes?

And then, if the university's vast real estate holdings, including lots of properties around the perimeter of the campus that is used for housing or just simply for investment purposes, all of a sudden crash in value, then what happens to that town?

So, every university and the town that they are in - have a LOT invested in students actually living in that town.

Would universities decide to just go digital altogether?  Maybe.  But, I think that would only happen after a long hard-fought battle.  One thing I learned while working for a university many moons ago - their higher echelon and their decision-making process, makes decisions very, very, very slowly.  And, they are very set in their ways and opinions.  

So, if it was to happen, it would have to happen after a major crash to their budget that they could no longer ignore.  And then, in a very weird world, which is hard to imagine, they may just all go offshore LOL.  But, that's really hard to imagine.

But, I think the worst that could happen once the schools open back up, is that they will drastically cut the cost to living on campus to save their budget, making it cheaper to live on campus than off.  But, even then, students who want to live off-campus will still probably have parents who will cave to their desires to live off-campus.  And so, there will still be a demand for off-campus housing.

I feel for any landlord suffering who depended on students always being a steady source of income.  I always expected this would be the case.  I guess now, the only sure rentals are those that cater to healthcare workers.