1 Fannie Mae Confidential and Proprietary

Multifamily Economic and Market Commentary

The spring 2021 semester provided a glimpse of what could potentially come for the student housing sector in fall 2021.

Compared to both semesters in 2020, spring 2021 showed a sector that was recovering at a rapid pace. Now that fall

has arrived, the turbulence experienced throughout 2020 for the sector is likely in the rearview mirror. Early returns for

fundamentals in the sector are performing extremely well and even exceeding pre-pandemic highs.

Even though the fall 2020 school year (the first full semester of the pandemic) was not as disastrous as many student

housing investors and developers anticipated, they were eager for a return to the pre-COVID days. Indeed, the student

housing sector has normalized at a rate much faster than market participants expected. Student enrollment rates bear

watching, however, as both declining enrollments and birth rates may present long-term challenges for the sector.

Supply Largely Uninterrupted, For Now

Supply has been one of the most prominent fundamentals of the student housing sector and one that catches the 

attention of all at the start of each new school year. For the last few school years, supply had mostly moderated and 

was put on the back burner relative to more pressing issues within the sector. During the height of the pandemic in 

2020, construction was considered essential and was largely unhindered. With minimal disruptions during 

construction, there were approximately 42,000 new beds delivered in time for fall 2021, which was practically level with 

fall 2020’s levels of 44,000 new beds, according to data from RealPage, Inc.

Even though supply and deliveries were not disrupted in 2020 and in 2021, the impacts of supply chain disruptions are 

being felt in advance of the fall 2022 school year. Practically every industry around the world has been impacted by the 

supply chain shortages. Since the projects scheduled to deliver in 2020 and 2021 were already in progress and close to 

completion, deliveries for those school years was largely unimpacted. However, according to RealPage, Inc., as of 

October 2021, there are approximately 27,000 beds scheduled to deliver in time for the fall 2022 school year. Although 

supply numbers are subject to change until actual delivery, it appears that the next school year will feature among the 

lowest amount of new supply delivered to the sector in quite some time. According to research from real estate data 

vendor John Burns Real Estate Consulting, the supply chain disruptions for lumber and windows have led to 

construction projects being delayed by at least two months. It is possible that many of fall 2022’s deliveries may be 

pushed out to deliver in spring 2023 or even fall 2023 due to supply chain disruptions. 

Source: RealPage Inc.

*Indicates supply underway, scheduled to deliver in Fall ‘22

Student Housing New Supply Deliveries by Beds

Contact : Francisco Nicco-Annan

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Fall 2021 Student Housing Update
2

Multifamily Economic and Market Commentary

Student Housing Fundamentals Seeing Record Improvements

Many student housing participants posit that the sector is recession-proof and, based on its performance over the 

past two years, many are now saying that the sector also appears to also be pandemic-proof. Although that’s certainly 

open to discussion, the performance of fundamentals for fall 2021 suggest the sector’s perseverance. Since many 

universities required students to be vaccinated, especially those living on campus – nearly 1,000 schools according to 

The Chronicle of Higher Education – this mandate has allowed off-campus student housing to seemingly return to 

normal and even out-perform the sector’s pre-pandemic results. 

Occupancy levels were largely impacted by the virus in fall 2020 as remote-learning and declining enrollments played 

a significant part. As of September 2021, occupancy rates tracked by RealPage Inc. were approximately 94.1% 

compared to September 2020’s occupancy rate of 88.2% and September 2019’s rate of 92.8%. Occupancies are 

considered full at 90%. As a result of vaccination requirements, relaxed enrollment requirements, and pent-up 

demand, fall 2021 occupancy rates are at record-high levels. 

Pre-leasing activity also improved by late summer, near the beginning of the actual school year. According to 

RealPage Inc., the final August 2021 pre-lease level was 92.2% compared to August 2020’s rate of 88.3% and 2019’s 

rate of 91.5%. It wasn’t until the late summer months of 2021 that pre-leasing activity gained steam; from October 

2020 through June 2021, pre-leasing activity briefly lagged behind 2020’s levels as students waited to see what the 

plans would be for the upcoming school year. 

Monthly Pre-Lease Rates Since Fall 2019

Monthly Occupancy Rates Since Fall 2019

Source: RealPage Inc. 

82%

84%

86%

88%

90%

92%

94%

96%

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Occupancy Rates

Fall 2019 Fall 2020 Fall 2021

0%

20%

40%

60%

80%

100%

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Pre-Lease Rates

Fall 2019 Fall 2020 Fall 2021
3

Multifamily Economic and Market Commentary

Source: Census Bureau

Declining Population Coupled with Declining Enrollments

Although the student housing sector has benefited from tailwinds, headwinds consist of declining enrollment trends 

over the next several years. According to the National Student Clearinghouse, as of fall 2021, total undergraduate 

enrollment had declined by 3.2% year over year. Although this was a slight improvement over fall 2020, when 

enrollments decreased by 3.4%, this is now the eighth consecutive year in which overall undergraduate enrollments 

have declined. 

Furthermore, international student enrollment has also been greatly impacted by the arrival of COVID-19. According to 

the Institute of International Education, during the school year that began in fall 2020, international student enrollment 

decreased by approximately 16% compared to the prior school year. Additionally, more than 40,000 international 

students who were accepted into US institutions deferred their fall 2020 enrollments as a result of travel restrictions, 

virus protocols and uncertainty due to COVID-19.

According to 2020 Census data, the US population grew at its slowest rate in nearly 80 years, with a population growth 

rate of 7.4% for the decade ended in 2020 compared to 9.7% for the decade ended in 2010 and 13.2% in 2000. 

Furthermore, the Center for Disease Control and Prevention reported that birthrates in the US declined by 4% in 2020, 

which was the sixth consecutive year of birthrate declines. Since the Millennial generation has transitioned into 

adulthood and has phased out of the primary age of attending college, the arrival of Generation Z (Gen Z) has brought 

potential headwinds to the student housing sector. Gen Z is less populous than the Millennial cohort and coupled with 

declining population growth, immigration trends, and birthrates, it appears that declining enrollments will continue 

over the long-term forecast. While fall 2021 returns have been positive for the student housing sector, there are many 

looming longer-term issues that the sector will need to address in the future.

% Increase in US Population Since 1940

0.0%

5.0%

10.0%

15.0%

20.0%

1940 1950 1960 1970 1980 1990 2000 2010 2020

% Increase in Population

Source: National Student Clearinghouse Research Center

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

Public 4yr

Private nonprofit 4yr

Private for-provit 4yr

Public 2yr

Grand Total

Negative % Decline in Enrollments

Total % Change from Fall 2019 Fall 2021 Fall 2020

Undergraduate Enrollment Changes Since Fall 2019
4

Multifamily Economic and Market Commentary

Waiving Admissions Tests a Short-Term Fix?

Although declining enrollments are not new to the student housing sector, it has been difficult to produce practical 

solutions that would help mitigate the annual enrollment declines. One solution that many colleges and universities 

adopted during the pandemic was to waive admissions tests (both SAT and ACT) requirements to entice more students 

to apply. Early returns from admissions offices around the country have produced positive results. According to The Los 

Angeles Times, the fall 2021 semester set a record high for college and university applications. Universities such as 

Colgate University, the University of California – Berkley, and the University of Pennsylvania saw their applications 

increase by 102%, 28%, and 34% respectively. Increasing the number of applications is a boon for colleges as it helps 

increase revenues for the university since college applications have a fixed cost. Furthermore, an increase in 

applications is also a boon (if it leads to increased enrollments) for off-campus student housing operators. At many 

colleges and universities, on-campus housing has a finite number of beds for freshmen and underclass students. If more 

institutions are accepting more students, students will need places to stay and that bodes well for boosting the 

occupancy rates for off-campus student housing properties where there are fewer requirements regarding who can live 

there.

Even though waiving testing requirements increased applications at both public and private intuitions, there is some 

nuance that accompanied the relaxed requirements. For the fall 2021 school year a survey was conducted by Maguire 

Associates, a market research group that provides enrollment data to colleges and universities. The survey centered 

around the testing policies for more than 250 public and private higher education institutions. The survey found that 

nearly 20% of both private and public institutions still required some form of testing, depending on a student’s field of 

study. When considering scholarships, that number doubled to nearly 40% of institutions requiring test scores 

depending on field of study. Overall, the survey revealed that test scores were mostly optional for both types of four-year 

institutions; however, it is unclear how long these protocols will stay in place. Furthermore, it is also unclear whether an 

increase in applications has led to an increase in enrollments, and institutions have not committed to waiving test 

scores beyond the fall 2023 school year.

Short-Term Boon, Long-Term Headwinds

The off-campus student housing sector has largely emerged from the pandemic and achieved performance levels that 

bested pre-pandemic highs. Both occupancies and pre-lease rates are nearly as high and full as they can be, which 

bodes well for the sector. Supply being delivered to universities has continued to moderate and is on track to be the 

lowest amount in more than a decade for the fall 2022 school year. Higher education institutions have also had to 

produce new ways to mitigate the declining enrollments that the sector has faced for the last several years. Although 

overall undergraduate enrollments still contracted in fall 2021, the rates of contraction were slightly improved 

compared to fall 2020. The slight improvement in enrollments suggests that schools waiving test requirements and 

accepting more applications may have had a slightly positive effect in the short term. However, potential headwinds 

include a dwindling applicant pool as the overall US population growth rate is at its lowest point in nearly 80 years and 

birthrates in the country have declined for the fourth consecutive year. Coupled with a large decrease in international 

enrollment, if creative solutions that maintain the current pace of enrollments don’t come about then the student 

housing sector will have to also adjust to the new reality.

Source: Maguire Associates

0.0%

20.0%

40.0%

60.0%

80.0%

Tests

Required

Optional

for Some

Optional

for All

Not

Required

% of Survey Respondents

Public Private

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Tests

Required

Optional

for Some

Not

Required

Not

Awarded

% of Survey Respondents

Public Private

Fall 2021 Test-Optional Policies Fall 2021 Test-Optional Policies for 

Scholarship Consideration
Multifamily Economic and Market Commentary

5

Francisco Nicco-Annan

Lead Economist

Fannie Mae Multifamily Economics and Strategic Research

November 9, 2021

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economic and 

Strategic Research (ESR) Group included in these materials should not be construed as 

indicating Fannie Mae’s business prospects or expected results, are based on a number of 

assumptions, and are subject to change without notice. How this information affects Fannie 

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estimates, forecasts, and other views on information it considers reliable, it does not guarantee 

that the information provided in these materials is accurate, current, or suitable for any 

particular purpose. Changes in the assumptions or the information underlying these views 

could produce materially different results. The analyses, opinions, estimates, forecasts, and 

other views published by the ESR Group represent the views of that group as of the date 

indicated and do not necessarily represent the views of Fannie Mae or its management.

Copyright 2021 Fannie Mae