Housing Crisis: Developers Vie to Replace Barracks and Dorms With Pricey New Pads

One of the model bedrooms. (WSJ)

One of the model bedrooms. (WSJ)

For years, students and soldiers, different though most aspects of their lives are, have shared one thing in common: their bedrooms. Barracks and dorms both evolved as low-cost ways to house large groups of young people while they studied and worked. They may not be the most comfortable accommodations—few people would prefer to split their bedroom with a platonic friend or worse, an enemy—but comfort isn’t the point. Economy is. And when you’re dealing with two populations of limited means—most students either live off stipends from their parents or loans and most lower-ranking members of the military earn modest salaries—economy is not only an important point, but an essential one.

Which is what makes the privatization of student and military housing so worrisome.

While an ever-growing number of developers have been gravitating to student housing for some time, lured by a largely recession-proof investment fueled by students who take out what are essentially guaranteed loans (borrowers may default, but they can never escape by declaring bankruptcy), now developers have started to target singles’ military housing as a new and potentially lucrative market. As The Wall Street Journal recently reported, a developer has built the military’s first private housing complex for single service members on an army base in Fort Meade, Maryland. (Private developers have been building housing for military families for quite some time.)

Corvias Military Housing, seeing a way to shoulder into a market that is not currently a market, footed the bill for the apartment complex’s construction without help from the military, banking on the fact that service members would leap at the opportunity to live in a private room or a shared apartment rather than a dormitory-like set-up.

They probably will. The problem is that the units, while they appear far from luxurious, are quite expensive. Whereas the government barracks are generally free, the new apartments will charge a monthly rent of $1,296 per person for a shared two-bedroom apartment. A one-bedroom will go for $1,624 a month. Much of the cost will be paid for by army vouchers, according to The Journal, but a developer wouldn’t be interested in building military housing at its own expense if there weren’t a profit to be made somewhere.

In other words, we expect that the move is not driven by altruism, as Corvias would have the public believe, telling The Journal that, “With the unrest across the globe, our service members deserve a higher quality of life and a space where they [can] enjoy their time off [and] their time with others.”

And that profit, clearly, is to be made from the low-ranking service members and/or the government. The question is why the apartments are so expensive—$1,296 a month for a shared apartment rivals what New Yorkers pay and our housing is some of the most expensive in the country. They may be fancier than typical barracks, with private bathrooms and living rooms in the apartments and a shared pool and videogame kiosks, but the units hardly seem like standard luxury units. The other question is whether service members can afford to pay for something that used to be free. Especially considering that a lot of lower-ranking soldiers, both single and coupled, have trouble paying their bills as it is—it’s not uncommon for military families to use food stamps.

Every developer knows that building affordable housing doesn’t pay (which is why so few do it without government subsidies) and that building middle-tier housing isn’t as profitable as building luxury housing. Which means that developers looking to build student and military housing, which are types of affordable housing, generally must “upgrade” the units—i.e. make them less affordable. And therein lies the problem.