US Student Housing: Mapping Rental Trends & Student Migration Patterns

The United States has cemented its reputation in the global higher education landscape, clashing close corners with the UK, Australia, and Canada. Quality of education and a high standard of living for both domestic and international students in the US are among the top factors contributing to the sector’s growth in 2024.

In this detailed article, readers will get a chance to explore the US student housing market from an industry lens, highlighting key trends shaping this dynamic landscape in upcoming years. So, let’s get started and take a deep dive into how international students are currently driving the growth of the US market!

Enrollment Surge in US Higher Education Sector

Approximately 1.09 million international students were enrolled in the US for the academic 2023-24, contributing $17.6 billion to the student housing market. In the Fall 2023 Snapshot on International Student Enrollment by IIE, close to 92% of institutions expressed their positive outlook towards increasing their international student enrollment in the coming years.

Taking into account various capping and visa policy changes across top student destinations including the UK and Australia, the US has a fair advantage to expand the higher education industry, currently among the U.S.'s fifth-largest export industry, with over 368,000 jobs associated with hosting international students.

To understand the growth of international students in the US in the past few years in more detail, hop on to read amber’s “US Student Housing: Enrollment Shifts — China vs. India”, elaborating more on enrolment trends and growth in student numbers.

State-Wise Migration Patterns of International Students

Hosting students from over 210 countries, the US student housing market is expanding rapidly as a result. According to the Open Doors Report 2023, there was an 11.5% increase in international student enrollment at US colleges and universities during 2022-23.

Three states cement their position at the top in this category. These are not just educational powerhouses but also key markets for student housing, driven by the steady increase in international student numbers:

1. California takes the lead: California is a significant player, attracting students from different countries to the US. California’s gross rental valuation of international student housing stands at approximately $287 million, hosting over 138,393 students, marking a 3.20% increase in student numbers from 2022.

2. New York follows closely: New York, a.k.a. The Big Apple, treads behind California with $263 million in gross rental value, hosting 126,782 international students, denoting a staggering 11.50% increase in 2023.

3. Texas expands rapidly: Texas has remained a top state for students owing to various factors. The state hosted 80,757 international students, marking a 15% increase in numbers from 2022, denoting a gross rental valuation of $109 million.

International Student Distribution & Sales by Region

Accommodation for international students in the USA has been an integral part of the higher education sector. The Northeast region of the US observed the highest international student population in 2023 with 405,000 students.

This region also observed the highest percentage increase from the previous year, at 11.6%. According to Amber's US International Student Housing Annual Report 2023-24, the Northeast region is followed by the South (383K), West (353K), and Midwest (262K) in terms of student numbers.

The Southwest region recorded the maximum value of regional sales at $8.06 billion, while the Southeast region observed $7.70 billion in regional sales value. The Southern region together recorded the highest number of student beds at 685.5K as compared to other regions.

All in all, the total active student population in the four major regions was 1.4 million in 2023, a 10.5% increase in 2023 as compared to 2022. This regional distribution highlights the diverse appeal of US institutions across different parts of the country, each offering unique academic and cultural experiences.

Analyzing Region-Wise Rental Growth & Rental Yield in US

As student numbers continue to skyrocket in the US, the student housing market is steadily expanding to keep up with the demand. Diving into specifics, the US student housing sector observes a national average rental growth of 9.78%, with the Northeast region maintaining a strong rental yield of 9.97% in 2023.

According to amber’s US International Student Housing report, the Southern region leads with the highest rental growth at 12.15%, while the Northeast region tops with the highest average rental yield at 9.97%.

In March 2024, as observed by RealPage, student housing located within a mile from campuses recorded an average rent growth of 7.3%, compared to 5.8% for all other properties. By June 2024, annual rent growth across 175 core universities stood at approximately 4.4%.

Let’s take a closer look to understand the region-wise rental growth and rental yield in the US

Investment Activities Across US in Student Housing

The US has been on the brink of high investment injections in the past few years, driven by the largest student population enrolled in higher education compared to other countries.

Transaction Volumes & Notable Acquisitions in 2023

The US recorded an annualized total of $22.8 billion, marking an all-time high in transaction volumes for student housing in 2022. One of the biggest transactions in that year was Blackstone’s acquisition of Student One.

In 2023, Landmark Properties acquired ‘The Lodges’ at 777 in Baton Rouge, Los Angeles, for $84.4 million with 1,290 beds, marking the largest acquisition in terms of student beds in 2023. To find a detailed snapshot of “Key Student Housing PBSA Acquisitions in 2023”, hop on to read Amber’s US International Student Housing Annual Report 2023-24.

US Student Housing Investment Recovery in 2024 vs 2023

While investment values dropped to $5.7 billion in 2023, as stated by Walker & Dunlop, total transaction volume in July 2024 was over $1 billion. Currently, there are 1.34 full-time enrolled students for every bed at the 20 largest universities, allowing more opportunities for expansion of off-campus student housing.

Key acquisitions in 2024

There have been several acquisitions and joint ventures in the US market owing to high investment interest from key players. Here are a few notable deals this year:

• In July 2024, Investcorp announced the acquisition of two student housing properties for $160 million, located at the University of Florida and the University of Texas at Austin, comprising 914 beds.
• Also in July 2024, Muinzer and its partner Walton Street Capital, purchased 362 beds across two properties in West Lafayette, for a combined $46 million. The company further aims to expand its portfolio by adding $2 billion in student housing assets near rapidly growing universities.
• In April 2024, KKR announced its acquisition of a portfolio comprising 19 purpose-built student housing properties from Blackstone Real Estate Income Trust (BREIT) for $1.64 billion. The deal is expected to close in Q3 2024.

US Student Housing Projections & Trends for AY 2025-26

With the 2025-26 academic year fast approaching, the US student housing market is set to experience significant shifts, driven by evolving enrollment patterns. Here’s a look at the key projections and trends shaping the sector:

#1 Supply pipeline looking steady—enough homes?

With steady demand in US universities, the supply pipeline of 164,820 beds, out of which 109,488 beds were currently under construction, with an additional 35,415 beds expected to break ground in 2024. Moreover, another 19,917 beds are expected to begin construction in 2025 or later. The break-up of the US supply pipeline is listed below:

#2 New visa rules likely to impact international students!

The US Government is constantly taking measures to improve the quality of education in the country. However, certain policy changes impact international students, at times raising concerns. Here are a few policy updates:

• Five-month restriction: In a recent policy change for F-1 visa holders in the US, international students will not be able to consecutively spend five months outside the US during their academic program, impacting decisions to partake in internship opportunities, exchange programs, or even academic breaks.
• Increased H-1B Visa Fees: The H-1B visa registration fee has surged from $10 to $215 (2150% increase), and the application fee has risen from $460 to $780 (70% increase), with additional fees for fraud prevention and other programs.
• Strengthened Requirements for Student Visas: Students applying for F, M, and J visas must now provide more detailed information, including passport details, to streamline appointment scheduling and reduce errors.

#3 Positive investor interest paving the way!

Similar to Blackstone's acquisition of ACC, many large foreign investors and sovereign wealth funds are looking to replicate its success. For instance, the Deven Group, for example, plans to expand its US student housing portfolio to over $1 billion in the next three years, building on its current $750 million in assets, particularly near prestigious universities where student populations are steadily growing. (Source: CoStar)

#4 Hospitality-focused, functional homes—No less!

In 2024, practicality wins over stylish homes! Beyond flashy rooms and high-end amenities, customer satisfaction now stems from residences that seamlessly integrate into the modern student’s daily routines and cater to their fundamental needs. Students no longer want fancy home setups, but rather homes with basic amenities inclusive of rent (Source: Walker & Dunlop).

#5 The bigger, the better—Home sizes keep rising!

There is an emerging trend to build larger buildings to accommodate more students, rather than smaller home setups. This shift reflects a broader move from smaller, local-run operations to large-scale, investor-backed ventures, highlighting high investor interest from international players. This approach will enable owners to have more amenities to spread out costs more efficiently, leading to lower rents per student tenant, in accommodations near universities (Source: The New York Times)

Charting the Course for US Student Housing

With rising enrollments in higher education from various source countries worldwide, the demand for student housing is expected to remain steady. Property operators can explore expansion opportunities in Southern and Northeast regions, promising high rental returns.

Top student states like California, New York, and Texas are expected to remain popular among students owing to reputed colleges and high quality of living. However, operators need to be aware of price fluctuations to optimize revenue as well as maintain high occupancy rates.

As the industry continues to evolve with emerging trends, the student accommodation market in the US is a crucial space for international investors, owing to high student demand year-over-year. Operators and investors can explore the US student housing market by downloading “Amber’s US International Student Housing Annual Report 2023-2024” for industry insights and growth opportunities.