As more young people file for unemployment or have to deal with pay cuts, many are left to move home or downsize. Across the country, the housing market continues its recovery after the initial pandemic shock, but how are college towns coping under increased pressure?
Zillow estimates that young adults returning home represent about 1.4% of the overall US rental market, and almost 2% of the market in cities like Austin and Nashville. (HousingWire)
According to College Finance, as of May 5, 78% of students moved back home due to COVID-19, and 41% said they are unsure of how long they will be living at home. Out of students who lived on campus, 98% said they had to move home due to COVID-19, as many schools shut down and went all virtual the second half of the spring semester.
Tiffaney Alsup, a marketing manager at the Cardinal Group, which does marketing for student apartment companies, said that there was an uptick in delinquent rent payments as a result of the pandemic.
“For a month, it was higher delinquency amounts than we’re used to, but then everything went back to normal,” Alsup told HousingWire.
Now that back-to-school season is picking back up, schools and universities are releasing plans and deciding whether or not to welcome back students in person.
According to the Chronicle of Higher Education, which is tracking more than 860 institutions’ plans, two-thirds of colleges are planning to welcome back students in person, while only 7% are planning to hold only virtual classes. However, many other colleges have yet to make a decision, and even when it’s been announced, it’s not clear which classes students will have to show up for.
For example, the Texas Tribune said that the University of Texas in Austin will move almost one-third of its 11,000 courses online. The University of California at Los Angeles also said it would offer a combination of in-person and online classes this fall semester, and Morehouse College announced it would continue virtual learning in the fall, with “no decision about re-opening the campus to students for the Spring 2021 Semester.”
Unacast, a data-driven migration tool, revealed that counties with large university campuses became ‘ghost areas’ with the close-down of universities in March. These regions will suffer at least until the new term starts, Unacast said.
Greg Edson, a managing partner at apartment locating website collegestudentapartments.com, said that because of the pandemic, they weren’t sure what to expect with traffic to the website and apartment rental leads. However, the impact wasn’t as large as he expected. When the pandemic was declared, all the company did was take off the in-person tour features and create virtual ones, a solution many brokerages and iBuyers have been using during the time of social distancing.
“We slowly started seeing leads climbing back and they’ve been stronger than ever right now,” Edson told HousingWire. “So for us it was a potentially scary time since our business revolves around colleges. But, out of that, it caused us to really work on providing more value for the companies that we work with and working on direct integrations with property management software companies, so we spent a lot of time doing that kind of stuff and making sure that we can provide as much value as possible for our customers.”
College towns
Two huge college towns, Boston and Berkeley, California, are doing surprisingly well considering their student population. Harvard Law School is going totally virtual in the fall, while the University of California at Berkeley is beginning the fall semester virtually and returning to completely virtual after Thanksgiving break.
Berkeley’s neighboring college, San Francisco State University, will remain fully virtual in the fall semester.
Further, other Boston-area universities such as Berklee College of Music will offer hybrid class options, Brandeis University classes will be mostly virtual and Boston College will plan on welcoming back most of its students in in-person classes.
David Schwartz, CEO of Avance Capital, a real estate investment firm specializing in student housing, told realestate.boston.com that student housing demand just wasn’t there between mid-April to mid-June, but it rebounded once universities announced plans to offer a hybrid teaching model in the fall.
“The universities’ housing plans have taken measures to reduce density by limiting doubles and triples to single-occupancy units,” Schwartz told the publication. “As a result, my firm is seeing massive new demand from undergrads in addition to our traditional demand from graduate students.”
Malé Ivory, who works at student apartment living space The Berk in Berkeley, California, told HousingWire that there are still students inquiring about living there.
Although classes will be virtual the beginning of the semester, it is still anticipated that students will be moving back to town. Ivory said they expect a 50% occupancy rate.
“A lot of students, knowing that it’s gonna be online classes only, are trying to navigate around that and still want to live at the property knowing they will have to social distance,” Ivory said.
Alternatively, there are students who are canceling their leases or getting others to sub-lease so they can stay where they are.
“Because of the pandemic, we have reduced the number of occupancies we are going to provide,” Ivory said.
In terms of the fall semester, Edson said it might be stronger than ever, in an unexpected turn of events.
“We’ve seen a really nice uptick in business,” Edson said. “We’re a diversified company so we have other business units, where they’ve taken a little bit of a hit. But for the most part, housing has been so strong that it’s over-compensated for, for every other minute business season that we have.”
Although there will be more vacancies this year, Alsup added that more people are scrambling, and students are moving, increasing the demand for apartments.
“Regardless, I think college students have had enough, that they’ve basically said ‘hey we’re going to go back to college, and which virtual learning where we have to do it, we’ll go online, or go to classes when we can go to classes,'” Edson said. “I think there was probably a little bit of a low early on when people were like, ‘what are we going to do?’ But I think at this point, most students that we’ve talked to are heading back. They’re gonna, live in off-campus housing.”
If you are wondering how current national and global situations might be impacting your property’s value, your neighborhood, or the Real Estate market in general, we are happy to provide more specific information.
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