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The Conditions Behind Those Missed Payments Appear To Be Widespread

A report from the Philadelphia Inquirer in Pennsylvania. “When Toll Brothers cofounder Bruce E. Toll paid $23.5 million for a 552-bed student housing complex near Kutztown University eight years ago, record-smashing enrollment at the Berks County college was translating into huge demand for rooms.”

“Since then, Kutztown’s student population has plummeted nearly 20 percent, and BET Investments Inc., which Bruce Toll formed in 1998 to diversify beyond his home-building roots, lost the Edge at Kutztown apartments earlier this year to foreclosure.”

“Toll’s experience in Kutztown has echoes nationwide — especially in the population-losing Northeast — as slowing enrollment growth tarnishes student-focused housing’s reputation as a recession-safe real estate bet.”

“‘If you combine increased supply with enrollments that are decelerating at most schools — and turning negative at a lot of smaller schools — you end up with more beds than students,” said Rob Goldstein, who helps manage Plymouth Meeting-based CenterSquare Investment Management LLC’s real estate securities portfolio. ‘I think that’s starting to catch up with the industry.'”

“The delinquency rate for non-government-backed commercial mortgage-backed securities — a type of bond composed of property loans — for student housing projects spiked at a high of 9.4 percent in February and remained elevated in March and April, according to the debt tracker Trepp LLC, which began monitoring the asset class in 2004.”

“Only a fraction of the nation’s student-housing properties involve CMBS financing, which is more trackable than other forms of debt, but the conditions behind those missed payments appear to be widespread.”

“Nationwide, undergraduate and graduate-student enrollment, including part-timers, fell by about 5 percent to 22.3 million in 2017, the most recent year for which U.S. Census estimates are available, from the start of the decade.”

“During that same period, though, student-housing supply increased by more than 47 percent nationally to more than one million beds, according to an Inquirer analysis of data from market tracker CoStar Group, which excludes projects with fewer than five living suites.”

“Worst off are middle-tier schools in low-growth regions, such as Kutztown. Enrollment ‘used to grow because every year there were more high school raduates than there were the year before,’ said Alex Bloom, a consultant with EAB Global Inc . ‘We’re now at a period where that’s going to decline precipitously.'”

“The dorm-building boom benefited small, regional campuses because it enabled them to claim a greater share of the growing college-bound cohort than could have been accommodated by their existing stock of homes.”

“And fueling much of the construction was an appetite for student housing among investors, who saw the projects as good shelters from bad economic times because university enrollments are generally unfazed by downturns, said Goldstein of CenterSquare.”

“A big portion of that investment came from overseas pension and sovereign wealth funds, such as the real-estate arm of Singapore’s state investor Temasek, which last year added the 850-bed Evo at Cira Centre South tower in University City to its already large portfolio of student housing in the United States.”

“As a result of this investor interest and temporary enrollment uptick, ‘there have definitely been assets in certain markets that shouldn’t have been built,’ said David Adelman, chief executive of Philadelphia-based Campus Apartments LLC, which owns or manages properties serving about 50 schools in 18 states. ‘You’ve had developers who haven’t looked at data at all and it was all determined by their ability to find a piece of land and obtain bank financing.'”

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  1. ‘You’ve had developers who haven’t looked at data at all and it was all determined by their ability to find a piece of land and obtain bank financing.’

    Checked!

    1. Billionaire real-estate investor Sam Zell says now is ‘the time to …
      Business Insider-May 8, 2019
      … time to accumulate capital’ for future real-estate buys as a glut approaches … Zell said, to buy cheap apartment and office buildings because of oversupply.

  2. ‘Nationwide, undergraduate and graduate-student enrollment, including part-timers, fell by about 5 percent to 22.3 million in 2017…During that same period, though, student-housing supply increased by more than 47 percent nationally to more than one million beds’

    And anybody that reads this blog knew years ago student populations in the US were dropping. So why built the airboxes?

    ‘‘You’ve had developers who haven’t looked at data at all and it was all determined by their ability to find a piece of land and obtain bank financing’

    Find a piece of land. Oh yeah, they were bidding it up! So much that the only thing that would work was luxury.

    1. I wonder if the trend towards online eduction is affecting the student housing business model. Anyway, given their keen market acumen, this might be a good time for Swill-ow to start flipping student housing, seeing as how they picked the perfect time to enter the residential home flipping business, adding 20 thousand empty student condos to their portfolio seems like the logical next step.

      1. I have two kids taking online college classes for credit this summer, while living with relatives (i.e. not in crazily-priced luxury student housing near campus). I’m sure we’re the only family where this is happening in the U.S.

        1. I think you forgot a “not”

          The current crop of graduating teens.. and their parents.. are being made painfully aware of the Student Loan sca… er.. situation, and the stigma of taking alternatives – community college, online classes, vocational training, etc. has been dropping rapidly.

          2. Maybe Da Bear is being sarcastic. 🙂

            Online training is definitely making a dent in the student housing business model. Online will cut the amount of time the kid needs to be on campus, even if it’s just a semester or two. (one a side note I wonder how online is affecting the school’s bottom line.)

          3. I think student housing is just part of the bigger picture.

            The message that my kids, and whole bunch of others are hearing loud and clear from those older than them is that “It’s a trap” to start out in your mid 20s with a metric ton of non-dischargable debt.

          4. Which reminds me, I have a third kid in community college (lotsa kidz!)

            My son is also starting a local college in the fall close to my parents and will transfer in a couple of years. I’m forking out for the dorm though because he needs the experience. But this is an old school local college (the same one I went to) and the dorms are NOT expensive luxury accommodations. For lack of a better plan I’m giving him the old school experience and he decided that was a better choice than go somewhere expensive and have to come up with part of the money himself.

          5. I just paid $4,430.00 this morning for my daughter’s summer classes at WWU in Bellingham, WA. This is not the retirement I envisioned.

          6. Last week’s little irony: elementary school kids wearing school-sponsored shirts saying “I’m college bound.” Proper spelling is college-bound with a hyphen.

          9. If you take out student loans and can’t pay them off maybe you really are college bound.

    2. Ben how is NAU / Flagstaff doing with regard to student housing?

      I graduated from NAU back in 1991. It was a great place to go to school for a variety of reasons.

      1. Arizona doesn’t spend much money on colleges, so NAU exploded the numbers of international students. Years back the mayor was, business friendly, (cough) and they approved massive new projects. You wouldn’t recognize the place now, luxury student airboxes everywhere.

  3. At the end of the article:

    ‘Greg Sarangoulis, owner of Reading-based contractor GMI First Inc., is nearing completion of the first part of a planned three-building student-housing complex with 1,348 beds just southeast of campus. He’s calling it Advantage Point.’

    ‘In July, he took out a $22 million mortgage for the project from Toronto-based lender Romspen Investment Corp., which reportedly charges rates of about 11 percent — higher than conventional banks — for loans that have to be refinanced or repaid after one or two years, according to records filed with the Berks County recorder’s office.’

    ‘Sarangoulis did not respond to phone and email messages from the Inquirer, but told the Reading Eagle early last summer that he remained optimistic about the project.’

    “I think there’s been a slight uptick in the student population,” he said.’

    ‘Enrollment actually slipped by 20 students between this academic year and last, according to the university.’

    1. A question for Romspen Investment Corp. Why didn’t Toll take one of those Picaso’s off the wall and pay his loan? Oh, right, that’s not how they roll with these things. You can kiss that $22 million goodbye!

      1. ‘After losing 75% of value in the last twelve months alone, Metro Bank (LON: MTRO) shares extended the downtrend last week amid rumors that customers money is not safe and its financial health is not sound enough to continue the business.’

        ‘This Challenger bank, however, has quashed rumors related to its financial health and its latest round of fundraising.’

        ‘Metro Bank said: “We’re aware there were increased queries in some stores about safe deposit boxes following false rumors about Metro Bank on social media and messaging apps. There is no truth to these rumors and we want to reassure our customers that there is no reason to be concerned.”

        ‘Metro Bank shares have also been under pressure due to the 50% decline in its profits for the first quarter of this year. Panic selling and rumors about financial health are adding to the share price drop. Fidelity, which is one of the biggest shareholders, has declined its stake by nearly a third to 5.4% last week.’

        ‘Shares of Metro Bank are currently standing close to £489, down sharply from £3400 level that it had hit one year ago. Metro Bank is one of the largest challenger banks in the United Kingdom with 1.7 million customer accounts and 67 branches in London and the South East.’

        https://learnbonds.com/136571/metro-bank-says-cash-problems-are-solving-will-it-reverse-the-share-price-crash/

        1. ‘Uber’s first-day share drop cost new investors a record US$617 million. Is the market losing its appetite for serial loss-makers?’

          ‘The rare first-day price drop created huge losses for new investors. After tipping US$8.1 billion into the float, they ended Friday down US$617 million. University of Florida professor Jay Ritter, who maintains a database of IPOs, told media outlets he calculated that in raw dollar terms, new investors in Uber had suffered the largest first-day loss of any US IPO in history.’

          ‘Uber followed in the footsteps of less famous rival Lyft, which went to the public markets at the end of March at US$72 a share but closed on Friday at just US$51.09 after a horror week of its own on the markets. Lyft shares dropped around 19% over last week, propelled in part by Tuesday’s announcement of a US$1.1 billion March quarter loss. Uber had already announced a March quarter loss of around US$1 billion.’

          ‘Both Uber and Lyft have been unprofitable their entire lives, and Uber’s revenue growth has slowed notably over the last two years. The poor opening had some observers asking whether the markets may be past the peak of enthusiasm for loss-making stocks that cannot count on locking in consumers.’

          ‘But ride-hailing customers can switch to a rival company just by downloading a new app, and neither Uber nor Lyft has shown it can dominate the next era of ride-sharing. Uber and Lyft are also seen as having little scope to ring further cost cuts from their low-paid drivers.’

          https://news.theceomagazine.com/news/ubers-downhill-drive-could-be-bad-news-for-other-loss-makers/

          2. I don’t know, Bear. Still room for unicorns. Chewy dot com appears to be succeeding where Pets dot bomb did not.

        2. “We’re aware there were increased queries in some stores about safe deposit boxes following false rumors about Metro Bank on social media and messaging apps. There is no truth to these rumors and we want to reassure our customers that there is no reason to be concerned.”

          One of the dumbest moves a human being could ever make is to open up a “safe deposit box” at a bank. It should be called an “unsafe deposit box.” If you don’t think the bank can access it without your permission, or that you could lose everything, I have some fine oceanfront swampland on Venus to sell you.

      2. Could it be that this particular Toll Brothers project was spun off into a shell company with its own LLC holding the risk?

        1. Personally feeling the impact of losses or bad bets is only for the “little people”, don’t ‘cha know?

  5. Dummies. They didn’t see that the Millenial pig had traveled out the back end of the college python. Or, they did see it coming, but thought they could cash out just-in-time. Meanwhile, Gen Z kids (and their wiser Gen X parents) are much more wary about student apartments. They know full well that that today’s luxury amenities will be tomorrow’s student loan horror story on the news.

    The obvious solution is to turn all these student apartments into affordable housing for families. Won’t ever happen tho. Too many investors with too much influence stand to lose too much money.

    1. The obvious solution is to turn all these student apartments into affordable housing for families. Won’t ever happen tho. Too many investors with too much influence stand to lose too much money.

      This is exactly what I was thinking. There are a couple of nice student housing complexes that just went up nearby where we live. They seem to be doing well because our university is growing (just became D1 school). Even so, I look at those buildings and think it is exactly like what I feel needs to be built for non-students.

      1. ‘Won’t ever happen tho’

        It’s happening right now. I post multiple reports of entire complexes/condo buildings going into foreclosure every week now. As far as student, it’s more problematic. Like the Morgan student apartments the feds took over, they started sticking anybody in there to generate money. The environment soon sucked and everybody left except the 2/3s that weren’t paying any rent.

        1. Thanks for that Ben — I haven’t been keeping a close eye. From what I’ve seen, it’s a pretty long road from the student apts being foreclosed, to the student apts being occupied with paying families. Which investor/bank wants to take the hit?

          I just hope they DON’T put the homeless in there, not yet. Low-income families should have first dibs on paying for these apts. If the place turns to suckage, they will have only themselves to blame.

          2. “I just hope they DON’T put the homeless in there…”

            Years ago HUD was doing exactly that with defaulted properties that the government got stuck holding the bag. Police Dept(s) noticed a crime wave “metastasizing” across their cities using data-mapping tools.

          4. Interesting. In one video about the homeless in LA, one of the “advocates,” homeless himself, said that the solution was housing. The gov needs to get them into housing. If only housing weren’t so expensive, etc.

            I don’t believe it for a second, at least not for the ones on the streets. Some form of housing would probably help 10-15% of the homeless, the employed ones who live in their cars or on friend’s couches. They need help. But the ones sleeping on the sidewalk; IMO they are darn near lost causes.

            (On a side note, several cities and churches are building tiny house communities for the homeless. Which I am NOT a fan of. For 15+ years I paid to rent a one-bed apartment, and the bums get a sweet tiny house for free? I don’t think so.)

          5. the bums get a sweet tiny house for free?

            Whether people reduced to sleeping on the street can be helped at all, or if it is the last thing before inevitable death and damnation is one question. Whether they deserve help because of how wealthy and socially conforming you are is another matter.

          6. “But the ones sleeping on the sidewalk; IMO they are darn near lost causes.”

            Logan’s Run?

          7. The homeless should be housed in dorm style room (like my old college dorm) or old military base housing, or even vacant office parks. If/when they are ready/able, they can move up a step, etc. (Not sure where social conformity fits into it?)

          8. where social conformity fits into it?

            Conformity. Normal. Your yard stick, as relative to yourself.

        2. Ben, what do you think will be worse off on a nationwide basis, mortgages or multifamily loans?

  6. Higher .edu bubble. Also gov’t. driven by backing $1.6T in student loans. Taxpayer on the hook, again. Students were scammed by the system. Poor job prospects – stock buybacks=no capex + massive capital misallocation (malinvestment) via the Fed – and high debt. Now wising up. Online courses will eat the brick and mortar college’s lunch. This is happening now. Higher ed. bubble now deflating as well. Takes time. Value prop. for brick and mortar is broken.

    1. Now wising up. Online courses will eat the brick and mortar college’s lunch. This is happening now

      1) Yes, Totally
      2) Maybe / Somewhat
      3) Yes.

      I don’t think there will be a wholesale move to replace degrees obtained by sitting in classrooms with degrees obtained via laptop. Rather I think there will be some degree of decided “I don’t need this degree at all” and exploration of alternatives.

      Getting a college degree used to be a big deal, and generally a ticket to the middle/upper-middle class. Now they’ve effectively taken the place of a High School Diploma. Both in how common they’ve become (everyone has one, I need one too), and that for about 60-70% of students, a High School “education” doesn’t teach as much as it once did.

      The bar for learning in many core topics in HS has been dumbed down, due to a multitude of reasons from:

      * “Can’t fail them anymore, pass ’em (even if they can’t read) so the numbers look good”
      * “Can’t discipline them/can’t maintain order/have to put up with disruptors”
      * “have to accommodate 19 different languages, 40% of students with IEPs/learning issues/various needs”
      * “A slew of new ‘social’ topics that need to be taught instead of core learning”
      * “what the hell happened to teaching critical thinking/analytical methods”
      * “what core topics are left are taught to the state tests”
      * “quality of teachers isn’t what it used to be/pay sucks/risks of being a teacher (especially male)”
      * Budgets and ratios of ‘administrators’ to teacher

      I could go on for a while… but I’ll also note that there is a minority of students that now spends their days being hyper-competitive academically, seemingly even more so than in the past.

      1. Online learning doesn’t work as well for STEM majors. You really do need those labs and/or sophisticated computers and software.

        1. Agreed, and I wasn’t saying that the traditional college experience will go away for everyone… just that right now it’s been sold to everyone.

          My rant is about the changes in primary K-12 education and how it’s become bifurcated and compromised. Both my parents were HS teachers, and I got a first hand look at the other side and how it’s changed.

        2. Online learning doesn’t work as well for STEM majors

          I don’t know about that. I think I learned less than 5% in class and over 95% at home before class. I did this to get A’s and because it was the most time efficient way to study. I was working 40 hr/wk so couldn’t waste time.

          Last year I learned CAD (Inventor) online, just for my own purposes. That took a lot less time than sitting through 8 credits worth of classes.

          I’ve also found that people with 2 yr engineering degrees and some good work experience compete directly with 4 yr graduates in the work place. Not the research workplace I guess, where you need a prefix for your name.

          2. I think the promise of online education has largely failed. I mean, Khan Academy is very promising but these MOOC courses by Harvard and MIT have abysmally low completion rate.

            It’s not that I don’t believe in the potential of online, it is there. It’s that people underestimate the nuances of interaction and mentoring that can be done by someone with expertise in the field. Lectures are definitely overrated, but one-on-one instruction with a gifted TA or work groups is often where a lot of learning comes. The current online learning hasn’t fully managed to leverage that in my opinion. Keep in mind, I graduated rather recently and completed a ton of course work online too.

          3. Trad colleges have abysmally low graduation rates & completion rates, especially at the 4 year point.

            (Yes, it’s probably higher than MOOC, but when you consider how much more you’re spending, I’d say it’s still too low. And I suspect the low cost of MOOC’s is one reason for the low completion rate.

            To give a parenting example, you’re much more likely to push your kid to practice when you’re paying a lot (>$80/hour here) for private lessons than if the lessons are free (e.g. school band, you’re teaching them, etc) or cheap).

    3. Now if the Home School movement can kick the teeth out of the public skuuulz maybe we will make some headway. Of course the counties can always pilfer tax money as they do but they will have a harder time justifying their multi-million $ pensions and palatial county admin buildings if/when enrollments drops off of a cliff.

      1. With housing in many places requiring two incomes, homeschooling really isn’t an option.

        1. One has to wonder if that isn’t a design feature of the system or just an artifact of increasing taxes combined with loss of purchasing power via inflation.

          1. Nope! Needing two incomes is an artifact of … two incomes. The early adopter double-income couples did VERY well for themselves. They made two incomes in a one-income society and had plenty of options. But once you got a critical mass of supermoms with high-paying careers, there was an increase in demand for housing near the best schools. Couples had to compete by bidding up the price of housing. And now two incomes is the norm.

            (Elizabeth Warren wrote a whole book about this.)

          2. “Couples had to compete by bidding up the price of housing. And now two incomes is the norm.”

            And way more expensive for government to house the no-income moms and their staircase babies.

      2. Va won’t even approve the Tebow bill
        Home schooled save the State 340,000,000 a year

  7. My dorm room in my freshman year of college was roughly an 8’ x 10’ painted cinderblock cubicle, with a metal twin bed frame, a desk, a small dresser for clothes, and a bathroom shared with another dorm room.

    I know that sounds a lot like self-righteous “uphill both ways through the blizzard” condescension, and trash me if you see fit, but I just don’t get why college students need luxury housing. We just roughed it with the intent that things would get better after we got the degree. Now it seems like it plays out in the opposite direction.

    2. Came across a couple old pictures from my dorm room days in Ann Arbor – The thing that stood out the most was how little “stuff” I had then – I never felt like I was lacking – we just made do and were perfectly happy.

      1. Columbus, OH 1998: $420 rent for 3BD 1BA. East 19th Avenue between Summit and 4th.

    3. ‘I just don’t get why college students need luxury housing’

      They don’t. I’ve documented the phenomenon for years.Land prices are the bubble. They doubled, tripled or more. Then the only way the projects “pencil” are luxury rents. A more interested media might ask, why the surge in luxury apartments, student housing and senior housing all across the country, at the exact same time!

      The developers made up these stories of luxury demand after the fact.

      1. “Land prices are the bubble.”

        Add in fools who don’t know the value of anything, sprinkle in a few DegenerateGamblers and you’ve got yourself a collapse.

        The reality is if you paid more than $500 and acre, you got ripped off.

      2. Luxury senior housing is booming here — I honestly wonder who is going to be able to afford to live in any of them after the boomers shuffle off the mortal coil.

        My father spent the last four months of his life in the memory care section of one of them. $4,400 a month, and that was five years ago. Smelly, filthy living conditions, poor quality food, staff clearly paid minimum wage, and some oligarch somewhere counting all they money getting raked in. It’s obscene.

        What he did get, though, was safety — he was out of danger, and could not unintentionally be of any danger to anyone else, and that alone made it worth it. I just wish that they could have done a better job of running the place.

        1. ‘More than half of middle-income seniors 75 years or older won’t have enough money to cover assisted living rent and other out-of-pocket medical costs a decade from now, even if they were to sell their homes and use all other financial resources.’

          ‘That number will sharply rise to 81% if tomorrow’s seniors choose to keep their home but commit the rest of their annual financial resources to cover the nearly $62,000 annual cost associated with senior housing and supportive personal care services.’

          “We have built a robust public program over long-term care service for low-income and a private market for wealthy and higher-income people. The problem is that everybody else doesn’t have a good set of options,” said Pearson. “I certainly hope this is a wake-up call to policymakers, real estate operators and investors.”

          https://insurancenewsnet.com/oarticle/seniors-may-face-a-grim-financial-future#.XNmMzaBlBLM

          A couple of years ago I posted a report on senior housing construction in Phoenix. 15,000 units under construction, every single one was luxury.

          1. There is going to be a huge need for traveling CNAs/RNs/physical therapists and contractors to retro-fit housing so that aging seniors can “stay at home.” The cost structure of these assisted living facilities and skilled nursing homes just wont work with the US budget. Money is almost gone.

          2. I worked for a short time, for a general contractor that was the main GC for a fairly new, up and coming senior living owner-operator in DFW. We were under construction on 3 new projects, with 5 more in the “pipeline”. Usually 50-80 units, some with dementia care wings, full commercial kitchens, lavish common areas, smallish living apartments.
            Construction budgets were oftentimes done based on SF costs from the previous project, but these were not “cookie-cutter” designs. Each one very different.
            The client (owner) really wasn’t overly concerned with the cost. I figured out why… these facilities, once filled up, make HUGE profits. Rents ran from $3,500 to $4,500 per apt. Included a couple meals per day, and once a week house cleaning svcs.
            Owners let the GC choose the architect, and manage them. We usually entered in a contract with very vague, incomplete plans. We had a 10% fee as contractors, double the market.
            Owners just demanded rapid completion to get rents cranking.
            Do the math. $10 mill project, located in small beyond suburban areas (Burleson, Azle, Midlothian -cheap dirt). Figure in a low paid, hourly staff, insurance, food, utilities. You arrive at a huge profit even after the bank note pymt.
            Simple, one story, stick and brick construction. Nothing fancy.
            Rapid turnover with staff at these locations. Low pay and constant pressure to Sell, Sell, Sell these new leases.

          3. Once the government gets stuck with these old folks it’s nothing but obscene expenses and incredible liability.

          5. Appreciate the anecdote BigFootTx. I worked as an aide in several nursing homes like the one you were describing. But I found the care to be quite good (though food was not great), although the staff was pitifully paid. It was eye-opening to see this industry up close. When I became an RN I did lots of rotations and local facilities and we quite frequently had patients coming and going to assisted living facilities and skilled nursing facilities. You quickly figure out which institutions you would want your family to stay at, and those which have poor operations and even poorer care.

            Here is a tip to anyone who is considering a skilled nursing facility or an assisted living facility: look at the tenure of the CNAs and see how long, on average, they have worked there. If you get employees who are there for a while, it is a good sign. It’s not the fancy entrance way or the brochures that determine the quality, but the hourly caregivers.

      3. Why was there a bubble in land prices?

        I remember Polly (I miss Polly) saying that farmland prices were based on the most profitable crop. So if arugula is the most profitable, you have to pay arugula prices even if you want to grow cheap beans.

        Is it the same for residential land? You have to pay the luxury tower price even if you want to offer affordable housing? So it’s a self-reinforcing feedback loop. You have to buy land priced for profitable luxury, which forces you to build profitable luxury, lather rinse repeat. Which works great, until you run out of folks who can pay luxury rent. And then you cry and whine to local governments like the City of Denver, who then offer the apts at affordable rents and pay the remainder of the luxury price out of the pockets of homeowners.

        And then when the City runs out of money…. hmmm, I guess you get the Alexandria Ocasio-Cortez crowd to fund all this luxury crap with printed federal fiat paper. For the children of course.

        We’re effed.

        1. “And then you cry and whine to local governments like the City of Denver, who then offer the apts at affordable rents and pay the remainder of the luxury price out of the pockets of homeowners.”

          Actually it’s HUD’s section 8 program that brings federal dollars into cash-starved communities.

    4. You shared a bathroom with ONE other dorm? I shared a not so large bathroom with about 40 other guys. To me luxury was when I was the only one in there WITHOUT someone throwing up or having a large bowel movement or some young lady in there with her boyfriend.

      1. You’re right, I was fortunate — it was a single dorm, and they were hard to get. Most arrangements in student housing there were two dorms with two students each sharing one. In my junior year it was a communal loo shared by a wing of about two dozen, males and females on separate floors with separate loos.

        1. My first year at college the accommodations were two rooms for three people each sharing one bathroom. The building was over 100 years old.

      2. Sean you poor chap! My experience was different as I’m a real estate investor while you are a RentDonkey. Students now want the latest iPhones, Tesla, Starbux coffee every morning, etc. They are unwilling to live in the dump like you. I can see luxury student apartments starting at $3k or $4k per month the norm for the future. You see QE4 and interest rate cut is coming, after Trump get the trade deal of the century. You’ll be sorry that you didn’t buy real estate RIGHT NOW. Also the IPOs market is booming. I’m so glad I listened to D00med as he was much wiser than me. Cheerios!

    5. Same here. That was Northern AZ University or Ben’s backyard. We built lofts to get more space if the ceiling height permitted. I didn’t think the room size was bad for a young kid.

  9. So slumlords can no longer charge top dollar for dilapidated early 1900s $hack$ just because they’re near a college campus?

    That will be major eeeee-bola for Boston.

  10. Recently some here have discussed rents. This is a good place to post this article:

    ‘The number of new apartment buildings is at an all-time high around the Twin Cities, but those seeking a new home may be left out in the cold. Young mothers like Trish Betrish can only look up at the luxury high rises in downtown Minneapolis and wish she could afford a place to live.’

    ‘In 2018, there were 6,500 new market rate apartments built in the 7-county metro area, but only 300 new affordable units. At the Hello Apartments in Golden Valley, they follow the trend of smaller apartments, but with more amenities: pool, party rooms, lounges and the gym.’

    ‘“We hear a lot about how a lot of apartment construction is at the middle to high end, luxury range and a lot of people have expressed concern about that,” said Wright. “One thing I think is important to stress the single biggest contributor to affordable housing is naturally occurring affordable housing.”

    ‘That concept of naturally occurring affordable housing refers to older apartment stock – built in the ’60s, ’70s, and ’80s – that becomes more affordable over time.’

    ‘The problem is older properties, like the Crossroads in Richfield, are being purchased, rehabbed and turned upscale. The phenomenon is even referred to as “upscaling.”

    ‘Apartment buildings have also become a hot commodity for pension and insurance funds, and other investment groups looking for tax shelters. The data show that every building sale drives up the rent.’

    ‘According to data from the Minnesota Housing Partnership, while on average public investment creates 1,600 to 2,000 affordable housing units every year in Minnesota, about 2,000 units of naturally occurring affordable housing are lost through gentrification, or upscaling.’

    http://www.fox9.com/news/twin-cities-apartment-boom-leaves-people-behind

    1. ‘every year in Minnesota, about 2,000 units of naturally occurring affordable housing are lost through gentrification, or upscaling’

      Also known as “value add”. Slap on some paint, jack up the rents. Been going on for years, tax breaks for rich people, etc. Then they turn to each other and say, “renters are rich now, they’re demanding more and better paint!”

      There’s an entire industry now built around apartment flipping. It’s a self-reinforcement of stupidity. And like the student debacle, it’s feed by too much money creation and artificially low interest rates.

      1. Here in SE MI there is an abundance of post-WW2 bungalow housing in the region, built to demand from the labor intensive auto industry, and in desirable cities now it is being destroyed to free the lots up for luxury property flips, expensive “big foot” homes on plots arguably too small for them.

        These would be affordable starter homes for middle income folks otherwise. But no, all the spoils go to the mega-rich now.

        1. In my area there’s an abundance of post-war shacks, but not a lot of tear-downs unless it’s really close to transit 🚇 or major job center. Even my nabe, where the houses are on sizable lots. But the $100K crowd is too good for such housing stock. Oh no my precious, we wants a big house with an HOA and a long commute, yes we does! 🚗 Those post-war shacks are now filling up with illegal immigrants and their very large families.

          1. What drives the teardown / flip industry here is proximity to trendy “walkable” downtowns — some zip codes here are just the usual urban/suburban sprawl, but the older ones that sprung up in the 19th century and have the little downtowns are more highly desired.

            This will probably become the new segregation in this century here, with the better schools and law enforcement following the money.

          2. Compared to a new new big house a nice little post war shack should be cheap. Are they cheap enough to make financial sense even after a remodel to bring them up to modern comfort levels? If not I’ll take the new house rather than pay bubble prices for an old uncomfortable house that’s expensive to heat and cool.

          3. Carl, the massive advantage of postwar shacks is that they have a much nicer commute. In my area, commute is king. If you can live in under 1500 sq ft, IMO yes, it’s probably worth the $30-50K to renovate. You won’t make a profit as a flipper, but it’s worth it if you’re going to stay and enjoy the house (especially if you like a nice yard).

          4. Those stucco postwar (3br/1ba, 1200-sqft) shacks, were designed to conform to the VA loan limits. The afternoon sun would heat that stucco until it was like a sauna inside, and the single bathroom always reeked of the last visitor. The good old days?

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