Student Housing
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Everything Will Sell, At A Price |
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This is a story of quickly rising, and quickly falling real estate values. In Harrisonburg. Despite a relatively stable overall housing market.  Some parents of JMU students buy an investment property for their son or daughter to use a a residence while at JMU, and many of these parents have historically bought condos and townhomes at Hunters Ridge. Let's take a look at sales trends for each over the past several years:  As you can see here, prices of Hunters Ridge condos and townhomes had steadily (sometimes rapidly) increased for many years before arriving in 2009. Last year, Hunters Ridge sales slowed down to a snails pace --- with only one condo sale in the entire year, and only 3 townhome sales. Good news --- townhomes and condos are starting to go under contract again. Bad news --- it's because the prices have dropped very low! At the moment there are 5 condos on the market at the $60,000 price point, which is well below any recent sales price. There are also townhomes on the market for only $70,000. Some conclusions:
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History Repeats Itself: The Cyclical Nature of Student Housing in Harrisonburg |
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Harrisonburg has a tremendous over-supply of student housing, but it's not the first time! I've been engaged in some fascinating reading (thanks JGFitzgerald!) over the past day or so --- a Citywide Housing Analysis for Harrisonburg, Virginia compiled by S. Patz & Associates, Inc in 2005. Yes, it's becoming dated, but it provides some valuable insights into the history of our local real estate market. Here are a few statements that are quite interesting within the current JMU enrollment and student housing context: "Official JMU projections of 112 additional enrollments per year by 2008 suggest a need for no more than 200 new student apartments by 2010." Wow --- and to think that in the past two years, new student housing units have been built to accommodate an additional 3,292 students!?! "In the early-2000's there was a large oversupply of apartments catering to students. Development of condominium units for students aggravated the market for rental student units. Both markets are largely distinct, and only a few of the apartment complexes that attract students also attract young professionals and/or families. Since the early-2000's, apartments catering to students have also turned to other markets, such as the emergent immigrant population who can utilize the large numbers of bedrooms in student apartments, and the oversupply of student apartments has been reduced." This is interesting --- in the early 2000's there was an oversupply, then things were back to being balanced by 2005 (date of report), and we again have a significant oversupply in 2009. This report identifies immigrants as a population that filled the vacant student housing in the early 2000's. Will we see that again? And if not, who will fill the vacancies? "In the 2000/01 school year, 1,700± beds (or 450 to 550 apartment units) for JMU students were reported by S. Patz & Assoc. to be vacant and available. This total had been reduced to 1,000± beds in 2001/02, as student enrollments increased, and as a number of mature former student apartment units were taken off the market and made available for very moderate-income poultry and construction workers who previously occupied less attractive or more crowded housing." Again --- this begs the question of who will fill the anticipated 2,470 empty "beds" this coming fall that are/were intended for college students. If you're interested, there is a lot more very interesting data in this 129-page Citywide Housing Analysis report published in 2005. I'll be taking a look at some additional sections in the days to come. | |
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Harrisonburg Has A Tremendous Over-Supply of Student Housing for JMU Students |
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Two years ago there was a relatively even balance between students and housing. Now, as we approach Fall 2009, there will be 822 additional students, and 3,292 additional bedrooms for students. Woah --- did you catch that? An extra 2,470 bedrooms!?! I've written about it before....
The Students Enrollment Projections Data Source: http://www.jmu.edu/instresrch/project.shtml
The following new housing projects (with the corresponding number of "beds") all make up the 3,292 new "beds" that will exist as of August 2009.
Only time will tell what the impact will be of this over supply of student housing. So far, it has translated into many lease incentives for students, and higher than expected vacancy rates for many apartment complexes. Many student housing developers say that the newest complexes in the closest proximity to a college campus will be the most successful -- so far this seems to be playing itself out here in Harrisonburg, as many new complexes are doing quite well, and some older complexes are having difficulties leasing. | |
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The real reasons why so much student housing is being built for JMU students... |
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This past week the Daily News Record published an article about the new housing complexes being built to house JMU students. I believe the uninformed reader of the article would assume that there is a relatively good balance between students and housing --- but according to my calculations there is a significant oversupply of student housing for JMU students! Here are the numbers...
Tell Your Friends! Last week I was told of a (usually) well informed local business leader who was convinced that JMU will be growing to 30,000 and then 40,000 students within the next 5 - 10 years. This type of casual conversation will lead to an even wider sentiment that we need more student housing in Harrisonburg --- and this individual is often in conversation with student housing developers. I'm stepping down from my soap box now, but I hope that student housing developers, and those that advise them, will carefully study our market before continuing on a rampage of building college student housing! | |
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Understanding the Over-Supply of JMU Student Housing |
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 As I explained yesterday, there will be a rather significant over-supply of housing for JMU students in the fall, with an estimated 1,740 empty "beds" across all student housing options. As a reference point, my calculations show a current over-supply (during this 08/09 academic year) of approximately 1,075 beds. Why does this over-supply of housing for JMU students exist?
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JMU Student Housing Supply & Demand Analysis |
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 As we approach the 2009/2010 academic year at JMU, I believe we will be facing a significant surplus in student housing for JMU students. However, do bear in mind that there are many factors that make it difficult to track the actual supply and demand for student housing, including:
On the demand side of the student housing equation, enrollment for Fall 2009 is projected to be 18,928 students. This is an increase of 1,500 students as compared to our Fall 2007 baseline. On the supply side, I estimate that 3,240 additional beds will be available for Fall 2009 as compared to Fall 2007. These new beds are located in the following communities:
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In Theory, Construction Is Booming! |
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 Are builders gearing up? (Daily News Record) Yes, and no! Read on... Building Permits Issued Per Year:
So....the number of building permits has definitely increased, BUT a large portion of the City of Harrisonburg building permits are for multi-family student housing projects. Though not having conducted a wide survey, I would guess:
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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