Fannie Mae Sees Positive Turn for Student Housing
Fannie Mae’s June 2021 Market Commentary highlights the student housing sector, and positive signs of recovery for this asset class.
With a cautious approach during the height of the pandemic and before vaccinations began en masse, many colleges and universities switched to remote learning for much of the 2020-2021 academic year. Now, with the 2021-2022 school year approaching, the The Chronicle of Higher Education reports that “506 colleges have announced that all students (and in some instances employees) will be required to receive full inoculation from COVID-19 in order to return to campus for the upcoming Fall 2021 semester.” Fannie Mae points to this as a very positive sign for student housing, as it will prevent outbreaks at schools and in their local communities, and lead to more students returning to on- and off-campus housing.
Data shows that occupancy levels were substantially impacted during the beginning of last academic year. RealPage, Inc. reported occupancy levels of approximately 86.6 percent during the Fall 2020 semester, a 4.5 percentage point year-over-year decline compared with Fall 2019, when occupancy rates were at an estimated 91.1 percent.
However, the Fannie Mae report shares that early pre-lease data as of April 2021 has pre-lease occupancies increasing by over 10 percentage points – the biggest month-to-month increase in over three years.
An issue the higher education sector has been struggling with is declining enrollments - according to the National Student Clearinghouse, as of Fall 2020, undergraduate enrollment had declined by 4.4 percent year over year. To hedge both declining enrollments and the impact of the pandemic, some schools waived standardized test scores, which propped up application numbers.
In total, the last academic year was one of adaptation, for students, universities, staff, and families. Student housing developers and owners have also adjusted to changing / declining occupancies, rent growth, and pre-leases. Fortunately, the increased adoption of vaccinations in the student community have propelled the sector toward recovery.
To view the Fannie Mae report, click here.