Private fixed investment in student dormitories has rebounded since the pandemic disrupted in-person learning, growing 0.3% during the second quarter, or 2.1% year-over-year, to a $3.9 billion seasonally adjusted annual rate, according to a National Association of Home Builders report. This followed a 1.1% decrease in investment during the first quarter, driven by elevated interest rates that slowed student housing construction.
Investment in student housing is closely tied to college enrollment trends. Following the Great Recession, when college enrollment increased from 17.2 million in 2006 to 20.4 million in 2011, student housing experienced a surge in private fixed investment, according to the report. During the pandemic, enrollment fell by 3.6% in the fall of 2020 to 3.1% a year later. That led to private fixed investment in student housing to decline drastically, from $4.4 billion at the end of 2019 to $3 billion during the second quarter of 2021.
As enrollment continues to gradually recover from pandemic-driven declines, private fixed investment in dorms has rebounded, said NAHB. But demographic trends are reshaping the outlook for student housing, as the country faces slower growth in the college-age population. This is tied to a declining birth rate that followed the Great Recession, which is expected to result in an increase of only 8% in post-secondary enrollment, well below the 37% rise posted between 2000 and 2010.
“Despite recent fluctuations, the student housing construction shows signs of recovery and future growth is expected in response to increasing student enrollment projections,” NAHB said.
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