Student Housing: A Divide Between Luxury And Affordability

MADISON, WI—Colin Chval, an incoming junior at the University of Wisconsin-Madison, has twice found himself in a situation familiar to many students.

He can't find housing that is both within his budget and close to campus.

Over the past few months, when Chval was searching for an apartment for this coming lease term, he told Patch his goal was for him and his roommate to stay below $1,200 per month and within walking distance of campus—as he doesn’t have a car or bike.

Chval said the best they could do was to sign on a place that went $400 over their budget.

He faced a similar situation as a sophomore, which invoked a lot of stress on him.

“In the winter my funds ran dry, I had to take out more and more debt,” Chval said. “I was in that situation where you're choosing between rent and food.”

Just a few streets over from where Chval will be living on Bedford Street sits a glassy black apartment complex called The James—just one of many amenity-rich, high quality and higher priced student apartments in Madison.

Chval says he is financially independent and has a substantial aid package to attend school. At UW-Madison, many students like Chval feel that there is not enough affordable off-campus housing and that this need is especially highlighted by new higher-priced developments popping up around campus.

Just like other campuses across the country, there are stark contrasts between an increase in luxury apartments but also rising housing insecurity caused by lack of affordable housing.

Where Badgers Lives

Roughly 90 percent of UW-Madison freshmen choose to live in campus housing. But beyond that initial year, most students live in off-campus apartments or houses.

This year, there will be about 900 residents in campus housing who are not first-year students (such as transfer students), Brendon Dybdahl, Director of Marketing & Communications for UW-Housing, told Patch. By comparison, the incoming class of freshmen will be just over 7,300 students.

According to a CapTimes story from July, the sizable incoming class—which increases nearly every year—is partly why the school is running low on housing, forcing the UW Housing Division to put more students in rooms and even send some to the Lowell Center, the campus hotel on Langdon Street.

It’s not just that students don’t want to live in campus housing beyond freshman year, but there is simply not enough space or they may not be able to afford it. Living in the dorms, depending on which building and meal plan students opt for, can cost over $1,000 a month.

Chval lived in the dorms his freshman year and received aid, but now that he is off-campus, he said the only real option is to take out loans—which he said he has plenty of.

Maxwell Laubenstein, an affordable housing advocate, told Patch that many students struggle to find housing that gets them close to campus but keeps the rent manageable.

“It's become a captive market, because they need to know that past freshman year students can't afford to live on campus most of the time and within that they know that students live in the area,” Laubenstein said. “So there's an air of desperation for housing.”

Closer to Campus, Higher the Price

Rent College Pads notes that most Madison apartments cost between $600 to $900 per person with the price rising the closer it is to campus. Mark Eppli, Director of the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business, explained that this is what is called the bid rent curve.

“The closer you get to the place you want to be, the higher the rent is going to be,” Eppli said. “The further you get away, the less the rent is going to be. It's very steep, you pay a lot for that land that is proximate to campus and proximate to the activity centers namely State Street.”

This is why rent is more expensive for students who want a close walk to classes and the downtown area. But it's also a requirement for students with lower budgets like Chval, who said he didn’t have easy access to other forms of transportation.

“We have like the old University area and lots of places I think like East Randall, along University which seem affordable, but they're pretty far from campus depending on your major which comes with the added costs and opportunity costs of time, costs of cars and everything,” Chval said. “I don't understand why we keep erecting luxury apartment after luxury apartment.”

This is also why new developments, those marketed toward students as upscale and luxury are popping up on the outskirts of campus and the downtown area.

Typing “luxury student apartments, Madison” into a search engine will get several apartment complexes specifically geared toward students for their location and community. Eppli said these are increasing in number.

“We have seen tremendous growth, I think it's fair to say, in upscale or luxury student housing over the past couple of decades, especially relative to what we had prior to this,” Eppli said.

The growth can be attributed to a few factors including a development boom in Madison's downtown in 2014, which was driven by a need for housing, low interest rates and an increase in students and young professionals (namely Epic employees) to the downtown area, according to a CapTimes report.

Additionally, developers have found student housing to be a lucrative and stable markets, as this trend is apparent in college towns across the country.

Rent College Pads analyzed data from 2010 to 2015 and found that out of 200 cities, the cost of rent increased at all but eight. Similarly sized schools in cities which ranked in the top 20 include the University of Illinois located in Urbana-Champaign and the University of Iowa located in Iowa City.

Living in Luxury

CoreSpaces, a development company that brought upscale student housing such as Hub and James to Madison, has a new proposed project called Oliv which would sit just off of State Street on West Gorham.

In an interview with Patch, CoreSpaces developer Rob Bak said Oliv will be offering 10 percent of its beds, a little over 100, at what they call an equitable price—or a 30 percent discount. Bak said that the University’s financial aid office will qualify students for these beds and qualified residents can keep their status private.

“So say you're renting a four bedroom unit with three of your friends, and maybe your other three friends don't necessarily qualify for that,” Bak said. “But you can all live together, and no one knows the difference, right?”

Bak said that it is a misconception that Oliv is strictly luxury, but rather he argued the apartments aim for a mix of price points.

“If you think about it, we could build all true very high price point units,” Bak said. “But in our mind, that has a lot of risk associated with it, and it's not really what we're all about. We try to offer a very wide ranging type of price points in our buildings. So we achieve that through our unit mix.”

Bak said the rent prices at Oliv are still being worked out. According to a CapTimes report, prices without the discount are expected to be around $1,000.

The demand for these apartments is apparent. All it takes is a quick skim of the websites to see that most units fill up quickly with many students signing a lease even 10 or 11 months in advance.

However, students who don’t make it off the waitlist can still afford other options.

Chval said even at a discounted rate like other students have expressed, he wouldn’t be able to afford to live in a building like Oliv with his ideal budget being $600. On top of the stress he has had finding affordable apartments, Chval said he feels these developments create separation on campus.

Upward Trends

These difference between the upscale apartments and the struggles students face in finding lower-priced apartments is stark. But socioeconomic differences on campus weren’t always so apparent.

Eppli, who was a first-generation college student at UW-Madison, said the student housing looked very different back in the early 1980s. Nearly everyone lived about a 25-minute walk from campus in neighborhoods such as Vilas because it was cheaper.

Eppli joked that the quality of the housing was also far lower, saying that his family deemed it at best “shelter.”

And while back in the day, it was normal for nearly all students to dwell in these conditions, today the UW-Madison students who can afford it have the option to choose from luxury apartments that feature not only amenities such as pools, golf simulators and lounges, but they are also right near campus and entertainment.

“I think there's a desire for greater quality,” Eppli said. “We have fewer and fewer, first time, college educated, so if there's fewer, first time college educated, I would also suggest that there's also a greater income of those who are coming to school, and therefore the ability to afford something nicer than what I paid for.”

Eppli said it is important to think about who is likely to live in these apartments. Tuition for out-of-state students is just under $20,000 while residents pay around $5,000.

“Then you start looking at you, what is the income profile of those students coming to the University of Wisconsin,” he said. “First off it is likely that a good number of those folks can afford higher rent, and maybe a greater amenity set.”

Though, of course, Eppli said Wisconsin residents are living in these apartments and out-of-state students, such as Chval, may not be able to do so.

Still Looking

There are tools to help students navigate off-campus housing, such as the Tenant Resource Center, which Laubenstein suggested. This can also be a useful tool when dealing with low-quality housing that is not up to standard.

There is often a compromise for quality, Laubenstein said.

As in the case of Chval, paying any amount of money when floorboards are coming off, or there isn’t a good heating or cooling system seems unfair. When looking at prospective apartments, Chval said that a lot of units fully within budget were tough to justify because of poor quality.

Student housing sits in a unique position. These private developments fit somewhere between City and school—just as UW-Madison students play a major role in the downtown economy and housing market.

Patch reached out to Campus Area Housing, which works as a liaison between the school and the private housing market, multiple times for comment.

Chval would like to see more public figures advocate for affordable housing near campus and geared towards students.

Patch reached out to Juliana Bennet, Alder for District 8 — which oversees much of campus — and who is a student herself, multiple times for comment.

In an interview with WORT during her campaign this spring, she said she will advocate for more affordable options—given her own struggles to find an apartment near campus.

“Affordable housing in District 8 is twofold,” Bennet said. “You have a choice between an overpriced and overly bougie and just overly expensive place or you have another option that's more affordable, but run down and students shouldn't have to make this choice. We deserve in District 8 to live in a place that is affordable, safe and livable.”

Bennet has said she supports things like low-income tax credits and providing constituents with free legal support to protect them from predatory practices.

Chval said that college is already becoming unattainable for so many people—the last thing students should worry about is getting a roof over their heads.

“I understand that we live in Madison, obviously that's going to jack up prices to an extent, but we still owe it to students that are seeking higher education—higher education itself has become ridiculously expensive,” Chval said.

He worries that things like expensive housing will just create more barriers for prospective students.

“To not provide affordable housing and to continue to demolish already present affordable housing is just not right, in my opinion, and it continues to erect those barriers that just keep forming,” Chval said. “The wall keeps getting like higher and higher in my opinion.”