Dr. Richard Vedder
Dr. Richard Vedder, Distinguished Professor Emeritus of Economics at Ohio University, wrote a column at Forbes headlined “The New Campus Housing Bubble.”
My good friend, banker-scholar Alex Pollack of the R Street Institute, has shared with me some startling new data. High priced, comparatively luxury college student housing has been popular, and in this century lots of apartment complexes have been built with many amenities —granite or marble counter-tops, fancy swimming pools or saunas, etc. With unemployment rates below four percent and low overall real estate delinquency since recovering from the traumas of a decade or more ago, this sector should be booming. But according to a story published by Wolf Street (Wolf Richter), delinquencies are rising dramatically.
Mortgages for commercial apartment buildings are packaged together into commercial mortgage backed securities (CMBS). While government sponsored enterprises like Fannie Mae do much of this, there has been growing private sector involvement, trying to capture what has been regarded as a hot and growing market –nice housing for affluent students. Now, however, some 10.1 % of CMBS for student housing is either delinquent or in “special serving” (approaching delinquency). That compares with a low, normal 1.8% for other types of CMBS (e.g, non-student apartment housing). Moreover, deeper analysis shows the delinquency rate is even higher on student housing built recently.
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